The Group reported that Singapore Airlines (SIA1) (SINGY) carried out 99.4% fewer passengers than in Q1 2019, while its subsidiaries’ SilkAir and Scoot’s passenger revenue dropped by 99.8% and 99.9%, respectively. To no surprise, SIAG faults the sudden plunge in traffic on the global spread of COVID-19 and the restrictions imposed around it. However, as reported in the statement, the Group’s overall revenue was dominated by cargo contribution from their 33 converted passenger aircraft and seven operational freighters.
But even the operational changes did not save SIAG from a $1.2 billion operating loss in Q1 FY2021. Like most airlines, the Group focused on minimizing expenditures and increasing their liquidity in the first quarter to endure the ongoing crisis. It managed to successfully reduce expenses by 51.6% from last year, while its liquid cash stands at $9.5 billion.
Network of operations
During the first quarter, SIA was forced to scale down its network of operations to 14 metropolitan areas in the world. SilkAir and Scoot operated a minimal amount of flights to Chongqing, China Hong Kong and Perth, Australia. With some transit restrictions being lifted on June 8, 2020, the Group has revived more of its transit traffic, increasing the total number of destinations to 32 by the end of the quarter.
SIAG’s passenger capacity projection for Q2 FY20/21 remains a grim 7% compared to pre-COVID-19 levels. A total of 148 aircraft out of 220 in the group’s fleet are currently stored away.
Disappointed yet optimistic
The press release read that “the recovery trajectory in international air travel is slower than initially expected”, citing both International Air Transport Association (IATA) and International Civil Aviation Organization (ICAO) as having “continued to revise downwards their projections for the recovery of global passenger traffic in the near term.”
While it’s true that the current situation leaves little room for accurate predictions, IATA foreshadowed the postponement of global recovery until 2024. However, SIAG affirms to be aiming for “less than half of its pre-COVID-19 levels”, while stacking more chips on additional liquidity and cargo.
Consequently, the Group has opted to re-evaluate its fleet size and composition due to the pandemic and the huge losses. SIAG expects the review to result in a further reduction of $1 billion in potential carrying value.