Singapore Airlines Group cut its operating losses in the third quarter as strong freight performance helped offset losses in revenue from the collapse in passenger travel demand caused by the pandemic.
Upon publishing its financial results for the three months ending December 31, 2020, the SIA Group reported an operating loss of S $ 331 million ($ 248 million). This compares to an operating profit of S $ 449 million for the previous year.
However, this loss represented a better performance than the previous quarter, as it recorded an operating loss of S $ 826 million.
SIA Group recorded a net loss of S $ 142 million. It earned a net profit of S $ 315 million for the same period last year.
Three-quarters of revenue fell to S $ 1.07 billion, as the group's airlines, including SIA, regional unit SilkAir and low-cost subsidiary Scoot, reported sharp declines in passenger traffic.
The three carried only 195,000 passengers during the quarter, which was a 98% year-on-year decrease. Group traffic, measured as RPK, also decreased 98% from 86% in capacity.
However, the group notes that the contraction in global air cargo capacity, as a result of sharp cuts in global flights, has led to improvements in cargo load factor and returns.
"In response to the continuing strong demand for drug shipments and e-commerce, and the recovery of demand for general cargoes, SIA has added capacity by increasing the frequency of passenger aircraft operating cargo-only flights and resuming more passenger services. The freight fleet has also been optimized to provide greater cargo capacity," SIA adds.
Expenses for the period decreased 65% to S $ 1.4 billion as SIA's cost saving initiatives, including capacity reduction, were activated. Net fuel cost decreased by 77% to S $ 274 million, thanks to the capacity reduction and lower fuel prices.
On a nine-month basis, the group had S $ 2.2 billion in the red at the operating level, while it posted a net loss of S $ 3.6 billion.
The SIA Group revealed in its semi-annual results that it has acquired S $ 1.33 billion in impairment costs for the early retirement of 26 aircraft, including seven Airbus A380s.
The group says 95 of its 185-seat fleet are in operation, and most passenger flights are in operation.
During the quarter, the Group’s airlines gradually restored passenger services within their networks, covering 54 cities at the end of December 2020. They were operating at 43 points at the end of September.
By the end of April, the group expects to run a quarter of its pre-pandemic capacity, up from the 14% capacity that expired in the last quarter.
He notes that "the resurgence of Covid-19 infections, as well as the spread of more transmissible virus strains, continue to affect international air travel, as border controls and travel restrictions are tightened in many countries."
However, in line with the gradual reopening of Singapore, the group expects to see a deliberate expansion of its passenger network in the coming months. We will continue to monitor the status of travel restrictions and adjust our capacity accordingly to meet the demand for traffic. "