Singapore Airlines reports record $1.1 billion loss in Q1 amid Covid-19 pandemic, reviewing 'shape and size' of its network

On its outlook, SIA noted that international air travel is not recovering as quickly as expected. ST PHOTO: MARK CHEONG

SINGAPORE - Singapore Airlines (SIA) reported on Wednesday (July 29) a $1.12 billion net loss in the quarter ended June 30, its largest quarterly loss on record, as demand plummeted amid travel restrictions caused by the Covid-19 pandemic.

Revenue for the group plunged 79.3 per cent to $851 million year on year, while expenditure dropped 51.6 per cent to $1.89 billion, the company said in a regulatory filing.

SIA had entered the first quarter "at a time when market conditions were deteriorating rapidly due to the spread of Covid-19 globally", the group said.

"Demand for air travel evaporated as travel restrictions and border controls were imposed around the world to contain the spread of the virus."

Passenger carriage fell across SIA, SilkAir and Scoot, resulting in a 99.5 per cent decline for the company.

On its outlook, SIA noted that international air travel is not recovering as quickly as expected, with industry experts such as the International Air Transport Association and the International Civil Aviation Organisation projecting slower recovery of global passenger traffic in the near term.

"Industry forecasts currently expect that it will take between two and four years for passenger traffic numbers to return to pre-pandemic levels," said SIA.

The group's passenger capacity by the end of the next quarter is projected to be about 7 per cent compared to pre-Covid-19 levels. It further estimates that capacity may be less than half of pre-Covid-19 levels by the end of this financial year.

"We are reviewing the shape and size of our network over the longer term, given Covid-19 and its impact on our passenger traffic and revenue, which will provide clarity on fleet size and mix that (Singapore Airlines) will need."

The review is expected to be completed by end-September.

The group's shareholders' equity at end-June amounted to $17.6 billion, buoyed by a $8.8 billion rights issue backed by Temasek Holdings. It also secured $750 million from long-term loans on some of its Airbus A-350-900 and Boeing 787-10 planes.

In all, SIA has raised about $11 billion in liquidity since the start of its financial year in April.

DBS analyst Paul Yong urged investors to hold on the company's shares in a research report on Wednesday (July 29).
"Given the wide and varying degrees of success in flattening the curve or managing the outbreak among various countries, we believe that international air travel demand could take up to a year to gradually recover to pre-Covid-19 levels," Mr Yong said.

The key risk that the company faces is "if travel demand remains substantially subdued for a prolonged period", he added. "While air travel demand has plunged quickly in recent weeks, a prolonged drop in of air travel demand will lead to more losses for SIA."

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