Sats posts $9.9 million loss in Q2

SINGAPORE - Inflight caterer and ground handler Sats on Wednesday reported a net loss of $9.9 million for its second quarter, reversing from a year-ago profit of $6.8 million, as operating expenses rose and lower government grants were received.

Excluding the effect of reliefs, net loss for the three months ended Sept 30 would have been $19.7 million, an improvement from the $30.1 million net loss excluding reliefs in the year-ago period, the company said in a bourse filing.

During the second quarter, Sats’ revenue rose 46 per cent to $429 million, as its food and gateway segments reported higher revenue on the back of aviation recovery and consolidation of revenue from Asia Airfreight Terminal.

Operating expenses climbed 48.9 per cent to $437 million, due to factors such as higher staff costs and lower job support grants, the group said.

For the first half of its financial year, Sats’ revenue climbed 41.3 per cent year on year to $804.5 million, driven by growth in cargo volume and recovery in travel demand.

“Travel recovery is on track and picking up pace with further improvements expected in coming quarters,” the group said.

The group’s net loss for the first half of the 2023 financial year stood at $32.5 million, a reversal from the net profit of $13.2 million in the year-ago period. Excluding the impact of government reliefs, net loss for H1 FY2023 would have been $51.7 million, an improvement from the $65.5 million loss in the prior-year period.

No dividend was declared, as the board said “it would be prudent to not pay a dividend until Sats restores profitability without government reliefs”.

Meanwhile, Sats also provided an update on its

proposed acquisition of Worldwide Flight Services,

which was announced in September. It said it is “at an advanced stage of finalising its funding plan” for the proposed acquisition.

The company said the proposed rights issue will not exceed $800 million. With the total acquisition cost of $1.8 billion, the balance will be funded primarily through a combination of term loans and internal cash, Sats said.

“Sats has received term loan proposals from the company’s principal bankers at favourable market terms,” the company said, adding it believes this funding mix is “optimal”, given the current market conditions.

The rights issue is targeted to be launched after an extraordinary general meeting, expected to be convened in January, with further details of the funding plan to be announced prior to the meeting.

THE BUSINESS TIMES