SINGAPORE - National carrier Singapore Airlines saw its full-year operating profit plunge by 94.5 per cent compared with the year before, as the coronavirus pandemic grounded planes and brought most of global travel to a halt.
For the year ended March 31, the group reported an operating profit of $59 million, down from $1.067 billion in the last financial year. Net loss for the year was $212 million - the first annual net loss in the airline's 48-year history.
"The deterioration in operating performance from January to March 2020 eroded the improvements made in the first nine months of the year," said SIA on Thursday (May 14).
The sudden change in fortunes came in the fourth quarter - the group had in fact achieved a strong performance in the earlier three quarters, driven by robust passenger traffic numbers and business transformation initiatives.
But as fears about the virus spread globally in recent months, SIA saw a steep drop in passenger traffic that led to a drastic 21.9 per cent decline in revenue for the fourth quarter, compared to the corresponding period last year.
As a result, it swung to an operating loss of $830 million in the fourth quarter, a $1.056 billion reversal from the $253 million it made in the corresponding period last year.
Fuel prices also plunged unexpectedly amid the oil price war between Saudi Arabia and Russia, which led to a supply glut.
This led to fuel hedging losses on contracts maturing in the quarter, said SIA. Furthermore, the expected capacity cuts in the new financial year will lead to lower fuel consumption than previously anticipated, causing the group to be in an overhedged position.
"As a result, the group had to record substantial mark-to-market losses of $710 million on these surplus hedges," it added.