After two years on a low with losses during the Covid crisis, Singapore Airlines has returned to profit in the financial year 2022-2023. It has actually produced the highest-ever profit in its 76-year history, despite operating at only 79 percent capacity of pre-pandemic levels. Singapore Airlines is back with a record-high profit.
The re-opening of Singapore in April 2022 and the rest of East Asia, notably Japan, South Korea, and China this January, has thrust passenger demand and revenues to record levels. Consolidated revenues for Singapore Airlines and low-cost subsidiary Scoot reached $17.775 billion compared to $7.615 billion in FY2021-2022. Passenger revenues grew to $13.366 billion from $2.806 billion, thanks to 2.6 million passengers carried. The passenger load factor for SIA was 85.8 percent and that of Scoot was 83.9 percent.
Cargo is down but still strong
As demand for air cargo declined, so did revenues. SIA Group earned $3.605 billion with cargo, down $735 million year on year. Yields were down by 6.2 percent. Cargo and mail carried dropped to 923 million kilograms compared to 1.0 billion last year. Yet, cargo revenues reached the second-highest level in the airline’s history.
Consolidated expenses were up by 83.4 percent to $15.1 billion, reflecting the higher capacity and higher costs for fuel that increased by 147 percent to $6.0 billion. SIA benefitted from a $749 million gain on fuel hedging.
The consolidated operating profit was $2.692 billion, up from $-610 million in the previous financial year. Parent airline Singapore Airlines reported a $2.601 billion operating profit, up from $-112 million. Scoot produced a record operating profit of $148 million versus $-454 million. The consolidated net loss was $2.157 billion versus $-962 million. SIA Group ended March with $19.9 billion in liquidity and $15.3 billion in net debt.
Very strong HY2
The airline group also shared its HY2 results, which produced a $1.458 billion operating profit versus $1.234 billion in HY1 (April-September). Revenues were $9.358 billion, up $941 million in the first six months, and reached the highest half-year profit ever. The group already reported very strong Q3 results.
In HY2, Singapore’s traffic grew by 24.8 percent and outpaced the growth of capacity of 18.5 percent, resulting in a load factor of 87.4 percent. This also showed in the revenues per available seat kilometers (RASK), which at $10.2 cents also reached a record high. Singapore and Scoot operated to 109 destinations in 36 countries, with SIA serving 74 destinations and Scoot 58. The cargo network included 118 destinations in 38 countries.
From HY1 to HY2, expenses were up by $719 million to $7.901 billion, of which $900 million or 20.1 percent came from non-fuel costs that were offset by a $182 million reduction in fuel costs. The HY2 net profit was $1.230 billion, up $303 million from HY1.
Building back capacity
The airline is quickly building back capacity to China. Scoot resumed services to Haikou, Ningbo, and Xi’an in April, to Nanning and Shenyang in May, and will add Jinan and Nanchang over the summer. The low-cost carrier has also increased frequencies to Athens, Fuzhou, Guangzhou, Hangzhou, Langkawi, Makassar, Manado, Penang, Perth, Taipei, Hokkaido (Sapporo), Tianjin, and Zhengzhou. Singapore Airlines will add flights this summer to Barcelona, Frankfurt, and Rome to meet the higher demand during the summer peak. It will also resume services to Busan in August.
This should bring capacity to 83 percent of 2019 levels in FY2023-2024. The outlook is strong, but SIA is aware of geopolitical and macroeconomic uncertainties, and inflation, “which could pose challenges for the airline industry in the months ahead. Even though fuel prices have moderated in recent months, they remain at elevated levels. As competition is expected to increase with more capacity being injected on international routes, the Group will monitor developments closely, and be agile and nimble in its response.”
MAX orders canceled
While Singapore and Scoot kept their aircraft order book virtually unchanged during the Covid years, the group has now made some amendments. The most notable one is the cancelation of the order for eight Boeing MAX 8s, leaving thirteen aircraft in the unfilled backlog. It also amended the order for three 787-9s and changed them into 787-10s, of which it has now fifteen still on order. Also unfilled are three Airbus A350-900s, seven A350Fs, and 31 Boeing 777-9s. Scoot has three 787-8s, one -9s, twelve Airbus A320neo’s, six A321neo’s, and nine (leased) Embraer E190-E2s on order.
