The SIA Group has proactively reviewed all aspects of our operations since the pandemic, ensuring that the entire organisation is ready to respond to changes in the operating environment rapidly.
Singapore Airlines and Scoot have been among the first carriers to launch services and start sales to points served out of Changi Airport since restrictions began to ease in September 2021. Group capacity ramped up from an average of 47% of pre-pandemic levels in the fourth quarter of FY2021 – 22 to 61% in the first quarter of FY2022 – 23, allowing it to capture the significant pent-up demand. As a result, the SIA Group posted a record first-quarter operating profit of 556 million, which was also the second-highest quarterly profit in its history.
This came as the demand for air travel rose sharply after Singapore fully opened its borders to vaccinated travellers in April 2022. SIA and Scoot carried 5.1 million passengers during the quarter, up 158.2% from the previous quarter and fourteen-fold higher than a year before. Passenger traffic and load factors were robust across all cabin classes and travel segments, as well as all regions except East Asia, where border restrictions remain in certain markets.
SIA’s quarterly revenue per available seat-kilometre was 10.2 cents, a record for the full-service airline. The passenger flew revenue rose 1,456 million 119.3 quarter-on-quarter to 2,676 million on the back of a 126.7% growth in traffic. Passenger load factor rose 34.1% percentage points to 79.0%, the highest since the onset of the pandemic, as the traffic growth outpaced the capacity expansion of 28.9. Cargo flown revenue fell 17 million -1.5 to 1,096 million as the demand for air freight dropped due to pandemic-related lockdowns in China.
The decline in cargo loads -3.6 was mitigated by higher yields 2.2, amid capacity constraints on key lanes, especially between Asia and Europe. Consequently, Group revenue rose 1,439 million 58.2 to 3,911 million. Expenditure grew by 816 million, 32.1% quarter-on-quarter, to 3,355 million. This consisted of a 527 million jump of 70.6% in net fuel costs and a 289 million increase of 16.1% in non-fuel expenditure.Net fuel cost rose to 1,273 million, mainly on the 40% increase in fuel prices 414 million and higher volumes uplifted 187 million, which was partially offset by higher fuel hedging gains -91 million.
The 16.1% increase in non-fuel expenditure was well within the 28.9%increase in passenger capacity. The Group posted an operating profit of 556 million, a 623 million improvement from the 67 million loss in the previous quarter. On a year-on-year basis, this was better by 830 million than the previous years operating loss of 274 million. The Group recorded a first-quarter net profit of 370 million, versus a 210 million loss in the previous quarter of 580 million.
This was mainly due to the better operating performance of 623 million and the absence of 66 million in non-cash impairment charges, partially offset by the tax expense incurred versus a tax credit last quarter of -95 million. This was also an improvement of 779 million from a year before due to the better operating performance of 830 million, a lower share of losses of associated companies of 25 million, lower net finance charges of 14 million, and partly offset by a tax expense versus a tax credit last year -107 million. The Group recorded an operating cash surplus2 of 1,480 million for the three months, a quarter-on-quarter improvement of 978 million.
First Quarter FY2022 – 23 Balance Sheet As of 30 June 2022, the Group shareholder’s equity was 22.9 billion, an increase of 0.5 billion from 31 March 2022. Cash and bank balances saw an increase of 2.3 billion, rising to 16.1 billion mainly due to net cash generated from operations, including the proceeds from forward sales. As total debt balances remained at 15.7 billion, the Groups debt-equity ratio fell from 0.70 times to 0.68 times.
In addition to the cash on hand, the Group retains access to 2.2 billion committed lines of credit, all of which remains undrawn.
FLEET DEVELOPMENT During the first quarter, SIA took delivery of two Airbus A350-900s, one of which joined the operating fleet. Three Boeing 737-8s delivered in the previous financial year also entered service during the first quarter. One 737-8 delivered during the quarter will join the operating fleet after cabin retrofit. Scoot took delivery of one A320neo, which entered into service during the quarter, together with two A321neo aircraft that were delivered in the previous quarter.
One A320ceo was removed from the operating fleet in preparation for lease return. SIA’s operating fleet comprised 127 passenger aircraft and seven freighters as of 30 June 2022, while Scoot had 55 passenger aircraft in its operating fleet. With an average age of six years and three months, the Group operates one of the airline industry’s youngest and most fuel-efficient fleets. This allows the Group to offer customers greater comfort and innovative products while further driving operating efficiency and supporting ongoing efforts to lower carbon emissions.
NETWORK DEVELOPMENT During the quarter, SIA and Scoot reinstated services to several destinations in South East Asia Cebu, Davao, Hat Yai, Kota Kinabalu, and Medan, as well as Nanjing, China. Scoot launched new services to Jeju, South Korea. As of 30 June 2022, the Groups passenger network covered 98 destinations in 36 countries and territories and is getting closer to the pre-pandemic network. SIA served 72 destinations, Scoot 47 destinations, and the cargo network comprised 107 destinations. In response to the strong demand for air travel, the SIA Group will adjust the SIA and Scoot network in the Northern Winter operating season from 30 October 2022 to 25 March 2023. SIA will increase services to points across Japan, restore its Indian network to pre-pandemic levels, add more flights to Los Angeles and Paris, and continue its direct services to Vancouver.
Scoot will launch non-stop services to Tokyo, Narita and Osaka and add more flights to Bangkok, Cebu, Manila, Seoul and Surabaya. Group capacity is projected to go up to around 68% pre-pandemic levels in the second quarter of FY2022 – 23 and around 76% by the third quarter of FY2022 – 23.
TRAVEL RECOVERY The SIA Group has strengthened its operational and financial foundations during the Covid-19 pandemic. It will continue to invest in our people and the business to meet our growth plans and ensure that we emerge stronger.
Written by: Matthew Thomas
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