Singapore Airlines posted first-quarter net loss of $800m

Singapore Airlines posted first-quarter net loss of $800m”

Passenger carriage fell by 99.4 per cent for Singapore Airlines, 99.8 per cent for SilkAir, and 99.9 per cent for Scoot year on year, as air travel "evaporated" globally, it said.

SIA shares closed Wednesday's session at S$3.53 each, just prior to the earnings update.

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-priced Thai carrier that collapsed in June. This represents a year-on-year decline of S$1.23 million. The group also swung into an operating loss of $1.04b in Q1 from the $200m operating profit in the same period past year. Sales dropped 79 per cent to S$851 million, and traffic measured by revenue passenger per kilometer sank 99.5 per cent.

The national carrier also attributed the net loss to weaker operating performance, as well as the financial impact of S$127 million (one-time charge) from the liquidation of NokScoot in June 2020.

The company said Wednesday its group-wide spending fell S$2.01 billion (-51.6 percent) from a year ago to $1.88 billion, which it attributed to lower net fuel costs and non-fuel expenditure. The increase largely is due to the issuance of 8.8 billion Singapore dollars in rights. Debt-equity ratio fell from 1.27 times to 0.68 times.

In all, SIA has raised about $11 billion in liquidity since the start of its financial year in April.

On its outlook, SIA noted that global air travel is not recovering as quickly as expected, with industry experts such as the worldwide Air Transport Association and worldwide Civil Aviation Organisation projecting that it will take between two and four years for passenger traffic numbers to return to pre-pandemic levels.

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Passenger capacity at the end of the second quarter is forecast to be about 7% of the level before Covid-19.

It was also unlikely that the bulk of the airline's 19 Airbus A380s would return to service as there would be overcapacity, he said.

SIA also said it continued to negotiate with plane manufacturers over "adjustments to the delivery stream of existing aircraft orders and the schedule of progress payments to reduce near-term cash outflows". "We have reached an agreement with Airbus on some of these matters and discussions with Boeing are ongoing".

The airline also said it is reviewing its network to determine the size and mix of its fleet over the longer term.

The SIA Group is now operating 32 aircraft on passenger services out of a fleet of 220 aircraft, including seven freighters which are operational.

In addition, she gave SIA a share price target of S$4 per share, based on a target price-to-book multiple of 0.55x that she said is in line with trough-level valuations. "This will help to moderate fleet growth in the near term", it said.

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