A Singapore Airlines Boeing 777-300 at Changi Airport. Photo / Grant Bradley
A Singapore Airlines Boeing 777-300 at Changi Airport. Photo / Grant Bradley
Singapore Airlines chief executive Goh Choon Phong says steps it took soon after Covid-19 struck allowed the company to ‘’outlast the pandemic’' and now has posted record operating profits.
Soon after the airline was hit by the worst health and economic crisis for aviation, it secured $S15 billion ($18b) ina rights issue.
“It was a huge sum of course, it was more than our market cap then. And the reason why we went for such a big sum is because we wanted to ensure that we have enough funding to last a long time, to outlast the pandemic.”
This meant staff could have the “peace of mind” to focus on both handling the pandemic as well as to prepare for eventual recovery, Goh told a briefing following the release of half-year results.
The SIA Group posted record operating profits in the first half and second quarter of the 2022-23 financial year as the demand for air travel surged after Singapore fully reopened to vaccinated travellers in April 2022, and border restrictions eased across many key markets.
It posted a record $1.23b half-year and $678 million quarterly operating profit and has returned to paying dividends. Singapore Airlines (SIA) has the most flights to New Zealand of overseas airlines, operating 18 flights a week from Auckland and Christchurch with its own planes and another seven with commercial partner Air New Zealand.
Goh said the SIA Group, which includes Scoot, was first out of the blocks, especially compared to its regional peers.
The airline had “strong support” from its shareholders, notably the massive Singapore government investment and holding company Temasek Holdings which owns just over 55 per cent of the company.
It raised a total of $S22.4b during the past two and a half years.
Goh said the airline didn’t stop at raising funds, it took other steps to reduce costs with some staff losses and other workers taking pay cuts as well as innovative ways of keeping customers engaged.
Singapore Airlines spent more than $55m on rebuilding its lounges at Changi Airport. Photo / Supplied
“It’s not just about handling a pandemic, it is also about ensuring that we’re prepared for the recovery. Relative to the other Asia Pacific airlines we are much ahead of their capacity deployment.”
In its result announcement the airline said SIA and Scoot carried 11.4 million passengers during the six months to September 30, a 13-fold jump from a year before.
Passenger traffic and load factors were “robust” across all cabin classes and route regions, except in East Asia where border restrictions largely remained in place during the six months.
The Group’s passenger capacity rose to an average of 68 per cent of pre-pandemic levels
Like other airlines, strong demand and limited capacity has resulted in high yields and elevated fares for passengers.
Reuters estimates passenger yields across the group airlines were 32 per cent higher during the second quarter of the half-year compared to the same period in 2019.
In its outlook the airline said demand was expected to be strong into the year-end peak travel season. With the recent relaxation of border controls in parts of East Asia, the airline expects demand to pick up in Hong Kong, Taipei and points in Japan, especially over the holiday period.
“Forward sales are expected to remain buoyant in the coming months leading up to the Lunar New Year period (in January-February).”
However, the airline has identified headwinds, including high fuel prices, inflationary pressures across the supply chain, geopolitical issues, as well as macroeconomic uncertainties including the risk of a global recession, beyond the Lunar New Year period.
“We would not expect yields to stay at the same elevated levels we were at in 2022,” SIA executive vice president commercial Lee Lik Hsin told the analysts and journalists during the briefing.
Meanwhile three-quarters of airline passengers in Asia Pacific (Apac) feel confident about flying again, a significant rise from just 6 per cent since last year, according to Inmarsat’s 2022 Passenger Experience Survey.
The study surveyed 4000 people across the Apac region who have travelled by air in the past 12 months.
