LONDON – Singapore Airlines Group (SIA) has this week announced record financial figures for both first half-year and quarterly operating profits. $1.23 billion dollars in operating profit in the 1H23, and $678 million dollars for the quarter, signifying a return to normality as air travel begins to get back to pre-Covid levels.
Since April 2022, Singapore has been fully reopened to vaccinated travellers, and border restrictions have eased. Between SIA and Scoot, its low-cost airline sibling, they carried 11.4 million passengers which amounts to a 13 fold increase on the same time last year.
SIA owes this positive performance largely to key decisions that were made during the down time caused by the onset of the covid pandemic. Raising funds proactively, keeping hold of its people instead of laying them off, and deploying skills elsewhere to support the business, whilst not being utilised in their day to day roles, have all paid dividends since the industry underwent its restart.
Raising funds took the form of a sale and leaseback agreement on ten Boeing aircraft, this deal raising $865 million alone. This forms part of the groups strategy that manages residual value risk on its fleet of aircraft.
All cabin classes have seen a robust uptake from travellers across most route regions. One area impacted by low figures has been travel to Eastern Asia, where borders have still been burdened by Covid restrictions over the last 6 months. Average passenger capacity for the first half of the year is at 68% of pre pandemic levels.
As with a lot of airlines, fuel costs have put a dent in many operating profits, with the net fuel cost rising by 11.8%. Cargo revenues have reduced slightly compared to the first quarter, mainly due to a softening market and the fact that competition has increased in the sector.
Conversely, helping the operating profits were load factor, and Revenue per Available Seat Kilometre (RASK). Load factor was a record 86.6%, the like of which has never been seen in any quarter before. RASK was 10.3 cents, another highest figure in the groups history.
SIA took delivery of two more Airbus A350-900 aircraft in quarter two, and two Boeing 737-8 that have undergone a post delivery cabin retrofit. This puts the operating fleet at 131 passenger aircraft for Singapore airlines with 7 freighters. Scoot flies 55 passenger aircraft that has an average age of 6 years and 4 months.
The group boasts one of the youngest and most fuel efficient fleets, which is helping to support the reduction in carbon emissions and helps strive toward the decarbonisation goals.
During quarter two, numerous SIA routes were reinstated, Singapore-Shenzhen, Singapore-Beijing. Whilst Scoot restarted weekly flights to Fuzhou and five times weekly services to Osaka. With these additions, the group now covers 100 destinations across 36 countries.
Further easing of border restrictions across key markets in Eastern Asia will see services step up to meet the increase in demand. SIA group expect the market to pick up in Hong Kong, Taipei and areas of Japan over the coming holiday period. Cargo demand is expected to drop slightly, global economic issues are said to be a key contributor to this and in turn, is tempering global demand.
The company has committed to taking a strategic approach to cost discipline and taking its opportunities to grow its revenue. Talks are ongoing with the Tata group to potentially strengthen their partnership, with integration of Vistara and Air India on the cards.
In doing this they will allow the group to participate in the growth of one of the largest aviation markets in the world, whilst complementing the already successful, Singapore hub.
The SIA Group has also declared an interim dividend of 10 cents per share which amounts to $297 million for the half year ending 30 September 2022. This dividend will be paid out in December ’22.