SIA losses narrow as travel picks up


Restrictions lifted: An SIA plane undergoes maintenance at the Changi Airport. With Singapore further loosening curbs in April, quarantine-free entry is available for inoculated travellers from anywhere. — Reuters

SINGAPORE: A welcome revival in travel and cargo demand helped Singapore Airlines Ltd (SIA) narrow losses in the second half of the fiscal year through March, though the high price of oil weighed on the carrier, its annual results showed.

The airline’s net loss in the October-March period was S$125mil (RM397mil), it said in a statement, compared with a loss of S$804mil (RM2.55bil) a year earlier. Sales more than doubled in the six-month period to S$4.79bil (RM15.2bil).

Shares in the airline tumbled as much as 2.8% yesterday morning, their biggest intraday decline since late February, as some analysts flagged inflation concerns based on the higher fuel costs.

Singapore started unravelling tight Covid-19 travel restrictions in September, allowing fully-vaccinated people from certain countries to enter without having to quarantine – a boost to the flag carrier, which had suffered record losses in the height of the pandemic.

With Singapore further loosening curbs in April, quarantine-free entry is available for inoculated travellers from anywhere.

“Key markets around the world have further eased travel restrictions, supporting a strong recovery in demand in air travel across all cabin classes,” the airline said.

“Forward sales, when measured as a percentage of the total number of seats available, in the next three months up to August 2022 are approaching pre-Covid-19 levels.”

High fuel costs, the biggest expense for Asian carriers, are hitting the aviation industry just as it emerges from the ruins of the pandemic.

With supply squeezed by sanctions on Russia, Brent oil prices climbed to average about US$97 (RM427) a barrel in January-March.

SIA said its fuel costs more than doubled to S$1.38bil (RM4.38bil) in the six months through March as it operated more flights. It had a fuel hedging loss of S$167mil (RM530mil).

The carrier said in November that 30% of its fuel needs in the fiscal second half were hedged at an average Brent price of US$57 (RM251) a barrel.

The airline carried 2.68 million passengers in the second half, a jump from 710,000 in the previous six months. Yields, a measure of money earned from flying people per kilometre, dropped 22%. The company isn’t proposing a final dividend.

“Operations have improved quite substantially,” said Mohshin Aziz, director of the Pangolin Aviation Recovery Fund, which invests in aviation-related businesses. “People are going to take a holiday this summer. Things look promising, except for oil prices.” — Bloomberg

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