Singapore Airlines launched a new brand campaign during the past year. Photo / Supplied
Singapore Airlines launched a new brand campaign during the past year. Photo / Supplied
Singapore Airlines has enjoyed a spectacular turnaround in the past year, making a record operating profit of $S2.6 billion ($3.1b) as borders reopened and travel rebounded.
The group profit compared to a $S962m loss in the previous year.
In commentary released with its results overnight, the airline explained how itwas able to recover so quickly.
In the 2022-23 financial year the group including Singapore Airlines (SIA) and low-cost subsidiary Scoot reached 79 per cent of pre-Covid capacity - much higher than other Asia-Pacific airlines.
When the Covid-19 pandemic hit in 2020, the group said it acted swiftly and decisively to shore up liquidity and build its financial resilience.
“This strong liquidity position, and the confidence it engendered, enabled the Group to take a long-term view and make several strategic decisions ahead of the recovery in global air travel,” it said.
SIA and Scoot retained most of their staff, who were ready to step up when called upon. While it did park some planes in the desert and disposed of some Airbus A380s, a large proportion of the group’s aircraft fleet were kept operational, albeit at low utilisation levels in the early phase of the recovery, ensuring they were properly maintained and fully functional
“The group built up a strong base network in a deliberate and calibrated manner, ensuring that SIA and Scoot were in a position to ramp up ahead of any return in passenger traffic,” the airline said.
As a result, when the demand for air travel surged in the past financial year after Singapore fully reopened its borders in April 2022, and as restrictions on international air travel eased globally, SIA and Scoot could ramp up operations at short notice.
Both carriers were among the first to launch flights as borders reopened, and captured the pent-up demand as air travel returned.
The airline operates 18 services a week to Auckland and Christchurch, plus another seven with Air NZ.
Passenger load factors (PLF) jumped 55.3 percentage points to 85.4 per cent, the highest in the group’s history.
Group revenue increased by $S10.1b (133.4 per cent) year-on-year to a record $17.7b. Passenger flown revenue rose $10.5b (376.3 per cent) to $13.3b as traffic grew 449.9 per cent, outpacing the capacity expansion of 94. per cent.
Revenue per available seat-kilometre (RASK) was 10c, the highest in the group’s history.
While cargo flown revenue fell $735 million to $3.6b as a result of lower cargo loads and yields it was the second-highest annual cargo revenue figure in the group’s history.
The SIA group’s capacity is projected to reach an average of around 83 per cent of pre-Covid levels in the first half of the current financial year.
While Singapore Airlines is booming, data from China shows carriers there are not. The Global Times reports that last year, Chinese aviation suffered losses close to $NZ50b last year, more than double the previous year.
“The depth and persistence of the impact of the epidemic on civil aviation transportation was far exceeding expectations,” the Civil Aviation Administration of China said.
Singapore Airlines used an A380 to help flood affected passengers travel from Auckland earlier this year. Photo / Supplied
The outlook
Singapore Airlines says demand for air travel remains robust in the first quarter of the current year, underpinned by the recovery in air travel in East Asia.
Forward sales remain healthy across all cabin classes, led by a strong pick-up in bookings to China, Japan, and South Korea.
Near-term cargo demand is expected to remain soft as the industry navigates headwinds from the macroeconomic environment, and as inventory levels recalibrate to post-Covid conditions.
Inflation and weak economic conditions will impact consumer demand and trade, the airline said.
Increased bellyhold capacity - as more passenger aircraft return - amid softer demand continues to exert downward pressure on cargo yields, particularly on key trade lanes.
“Geopolitical and macroeconomic uncertainties, as well as high-cost inflation, could pose challenges for the airline industry in the months ahead.”
Even though fuel prices have moderated in recent months, they remain at elevated levels.
“As competition is expected to increase with more capacity being injected on international routes, the group will monitor developments closely, and be agile and nimble in its response.”
As of the end of March this year, the group had 195 aircraft in its operating fleet comprising 188 passenger aircraft and seven freighters.
Airlines around the world, including Air NZ and Qantas, are enjoying a strong surge in demand and profitability, bouncing back from heavy losses.
The International Air Transport Association said air traffic in March had recovered to 88 per cent of levels compared to the same month in 2019. Domestic traffic is at just on 99 per cent of pre-pandemic levels.
“Ticket sales for both domestic and international travel give every indication that strong growth will continue into the peak Northern Hemisphere summer travel season,” said Willie Walsh, IATA’s director general.
