SYDNEY (REUTERS) - Singapore Airlines (SIA) will cut capital spending this financial year by at least 12 per cent from its previous plan, with the final reduction to be determined by talks with planemakers over delivery delays, its chief financial officer said on Friday (May 15).
The new forecast of $5.3 billion or less by the end of the year ending March 31, 2021, compares with a $6 billion figure outlined in November before the coronavirus pandemic destroyed demand and led the airline to ground most of its fleet.
"Any agreements we may reach with Airbus and Boeing in the coming weeks and months are not reflected here," CFO Stephen Barnes said of the new estimate at a briefing for media and analysts.
SIA on Thursday evening reported its first-ever annual loss, citing poor fuel hedging bets and the collapse in demand driven by the coronavirus pandemic, saying the timing of any recovery was uncertain.
Regional rivals Cathay Pacific and Qantas Airways are among the global carriers looking to push back the delivery of new aircraft as they grapple with the plunge in demand.
Barnes said the SIA did not expect to fly at its pre-pandemic capacity for at least 12 to 18 months. It plans to retire its Boeing Co 777-200ERs earlier than expected and will not renew its eight Airbus SE A330 leases, which will expire in the next 12 to 14 months, he said.
Brendan Sobie, an independent analyst in Singapore, said that it would be difficult for SIA to make significant changes to its current-year deliveries, but that as the planemakers slowed production, some could be pushed into next year.
"I expect a bigger impact in the following fiscal years, with more significant deferrals in terms of number of aircraft and number of years," Sobie said. "This is in line with what we are seeing in the industry generally."
SIA and regional arm SilkAir have cut 96 per cent of passenger capacity through the end of June, and low-cost arm Scoot has cut 98 per cent.
The company said its cargo capacity had suffered less, dropping 60 per cent because it was maximising the use of its dedicated freighter fleet, using empty passenger jets to carry cargo and doing ad-hoc charter flights.
Air freight rates have risen sharply as airlines have cut back on passenger capacity; in normal times, around 50 per cent of air cargo is carried in the belly of passenger planes.