Singapore Air posts RM3.5b loss as traffic plunges 99.5%

Global air traffic has plunged and the situation is particularly dire for the likes of Singapore Airlines as it has no domestic market to fall back on

SINGAPORE • Singapore Airlines Ltd posted its biggest quarterly loss on record as the coronavirus left it flying less than 1% of its usual number of passengers.

The net loss in the three months to June was S$1.12 billion (RM3.45 billion), compared to net income of S$111 million a year earlier, the carrier said in a statement yesterday. Sales dropped 79% to S$851 million and traffic measured by revenue passenger kilometres sank 99.5%.

Air traffic around the world has plunged because of tight border controls and a reluctance to travel during the pandemic. The International Air Transport Association said on Tuesday that the airline industry is unlikely to fully recover before 2024. The situation is particularly dire for the likes of Singapore Airlines as it has no domestic market to fall back on.

Singapore Airlines said its passenger capacity may still be less than half pre-coronavirus levels by the end of its fiscal year next March, and that the recovery in international travel is slower than initially expected.

The carrier’s fuel hedging policy led to a S$535 million loss in the quarter, while there was also a S$127 million hit from the liquidation of NokScoot Airlines Co Ltd. Singapore Airlines owned a 49% stake in the low-cost Thai carrier that collapsed in June.

Singapore Airlines scaled back its network to just 14 cities in the quarter, before increasing it to 24 by the end of June. Its SilkAir unit ceased all operations temporarily except for flights to Chongqing, China, and has indefinitely suspended flights to the Thai resort island of Koh Samui. Low-cost unit Scoot operated a minimal network to cities including Hong Kong and Perth.

Passenger capacity at the end of the second quarter is forecast to be about 7% of the level before Covid-19. Out of a fleet of 213 passenger aircraft, only 32 are being deployed for passenger services, the airline said.

Singapore Airlines is reviewing its network and fleet, which is likely to lead to a material impairment of its older aircraft, particularly the Airbus SE’s A380, accounting for about S$1 billion, the company said. It expects to complete the review by the end of the current quarter.

The airline said it has reached an agreement with Airbus on adjusting aircraft deliveries and payments, though it didn’t provide details. It is still in talks with Boeing Co.

Singapore Airlines’ shares fell 1.1% to close at S$3.53 before the earnings release. They’ve slumped 45% this year, among the worst on a Bloomberg gauge of carriers in the Asia-Pacific region. — Bloomberg