Singapore Airlines posts S$4.3 bil loss after worst-ever year
(May 19): Singapore Airlines Ltd’s full-year loss widened to S$4.3 billion (US$3.2 billion) after the “toughest year in its history” as the Covid-19 pandemic continues to wreak havoc on global travel.
Group revenue slumped 76% for the 12 months ended March 31 to S$3.8 billion, due to the plunge in passengers flown across Singapore Airlines, SilkAir and Scoot -- the three airlines within the group, the company said in a statement after close of trading Wednesday.
The carrier lost S$212 million the previous year, when the coronavirus pandemic was just starting.
“Even though mass vaccination exercises are in progress in most of our major markets, the prognosis for the global airline industry remains uncertain,” Singapore Airlines said in its statement.
“While domestic markets have recovered in some countries, international air travel remains severely constrained and its recovery trajectory is still unclear.”
The International Air Transport Association last month widened its estimate for losses this year to about US$48 billion as new Covid flare-ups push back the timeline for a start of international air travel. The situation is particularly dire for carriers like Singapore Airlines that have no domestic market to fall back on.
In the latest blow, a long-awaited travel bubble with Hong Kong was delayed again this week after an increase in unlinked cases.
Shares of Singapore Airlines closed down 3.3% on Wednesday ahead of the earnings announcement. The stock has gained 10% since January, broadly in line with the benchmark Straits Times Index, whose moves have been muted as the trade-dependent nation’s economy withers. Singapore Airlines sank 33% in 2020, its worst annual share-price performance since 2011.
Bond offering
To help shore up its balance sheet, Singapore Airlines said it will go ahead selling an additional S$6.2 billion in convertible bonds. Already, the airline has raised S$15.4 billion, including S$8.8 billion from a rights offering since April last year, and cut about 20% of its workforce to trim costs. More recently, the carrier raised S$2 billion by selling 11 aircraft and leasing them back. It still has access to more than S$2.1 billion in lines of credit.
Temasek Holdings Pte, Singapore Airlines’ largest shareholder, has provided an undertaking to subscribe to its pro-rata entitlement and any remaining balance of the convertible-bond issuance, the carrier said in a separate statement.
Singapore Airlines won’t have issues securing funds because the carrier “is as good as a sovereign debt,” said James Teo, an analyst at Bloomberg Intelligence in Singapore. Things will improve “only when international travel returns in a bigger way — more vaccinations globally, a few travel bubbles with Hong Kong, Australia and New Zealand — and then more bilateral market re-openings,” he said.
The company has enough funds to last for almost two years, Teo said.
Passenger capacity
A recent improvement in passenger load factors for April however may be short lived, Teo said, because last month was likely driven by stronger India traffic as residents fled the country due to rising virus cases. Passenger traffic slumped 97.9% for the full-year period.
“Based on our current published schedules, the group expects passenger capacity to be around 28% of pre-Covid levels by June 2021,” the carrier said. “By July, group capacity is expected to reach around 32% of pre-Covid levels, and we expect to serve around 49% of the points that were flown before the crisis.”
Singapore Airlines posted a fuel-hedging loss of S$334 million for the 12 months. In 2017, the airline extended some of its fuel contracts to as far out as five years from the usual 24 months.
The airline paused fuel-hedging activity since March 2020 given the uncertain pace of recovery.
Separately on Wednesday, Singapore Airlines named Tan Kai Ping as chief financial officer, replacing Stephen Barnes, who is retiring. It also named Jeanette Wong as non-executive, independent director.
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