SINGAPORE: Singapore Airlines Ltd posted its biggest ever quarterly loss as the coronavirus decimated travel demand and fuel hedging and fleet impairment charges weighed on its bottom line.
The carrier reported a net loss of S$2.3bil (US$1.7bil) for the three months ended Sept. 30 versus a S$94.5mil profit the same period a year ago, before Covid-19 spread around the world, closing borders and all but putting an end to international travel.
Revenue plunged 81% to S$783.8mil, the carrier said in an exchange filing.
Singapore Airlines is cutting about 20% of its workforce and has raised S$11bil in funds through a rights offering and loans in a bid to survive the downturn.
The International Air Transport Association forecasts passenger demand may not return to pre-Covid levels before 2024. The situation is particularly dire for carriers like Singapore Airlines that have no domestic market to fall back on.
“The recovery from the Covid-19 pandemic is likely to remain patchy, given the new waves of infections around the world and concerns about imported cases, ” Singapore Airlines said in the statement.
“Nonetheless there are early signs of optimism. Customers are slowly becoming more confident about air travel, given the robust health and safety measures that have been put in place by airlines, airports and governments.”
The company implemented a second three-year transformation program in October as it tries to revive its business amid the devastating outbreak.
For the half year ended Sept 30, Singapore Airlines reflected S$1.3bil in impairment charges due to the removal of 26 older aircraft after reviewing its network to determine the size and mix of its fleet over the longer term.
That included seven A380s, eight 777s, nine A320s and two A319s.
The carrier said in July that the review could lead to a material impairment of about S$1bil on the carrying values of older generation aircraft, particularly Airbus SE A380s.
The main line had 134 aircraft in its fleet at the end of December last year, including 19 A380s. The carrier’s fuel hedging policy, meanwhile, contributed to a S$563mil loss.
In 2017, Singapore Airlines extended some of its fuel-hedging contracts to as far out as five years, from the usual 24 months.
The airline said yesterday it has paused fuel hedging activity since March given the uncertain pace of recovery. — Bloomberg
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