Singapore Airlines (SIA) has reported a net loss of S$3.5 billion in the first half of the financial year, largely due to impact of the Covid-19 pandemic.

A total of around 2,000 jobs have been cut by the SIA group during this period, which consists of Scoot, SilkAir, and SIA itself.

Severely impacted

Group revenue has declined S$6.69 billion year-on-year to S$1.63 billion in the first half of the financial year, down by 80.4 per cent.

Passenger flown revenue fell sharply due to a steep decline in passenger traffic (by 98.9 per cent).

However, SIA reported that this was partially offset by stronger cargo flown revenue, which is up by S$274 million, or 28.3 per cent.

Group expenditure has also decreased by S$4.42 billion year-on-year to S$3.50 billion, largely due to non-fuel expenditure and net fuel cost.

SIA's expenditure also dropped due to "wide-ranging cost-saving initiatives", which included capacity cuts, contract renegotiations and staff-related measures, further aided by various government support schemes.

The airline also announced mark-to-market losses of S$563 million on ineffective fuel hedges, following a downward adjustment to the expected rate of capacity recovery, and consequently, lower expected fuel consumption.

According to SIA, they have paused fuel hedging activity since March 2020, given the "uncertain pace of recovery".

More aircraft deployed for cargo than for passengers

The SIA Group said that it has concluded negotiations with Airbus, on a revised aircraft delivery schedule incorporating deferrals for part of the aircraft on order.

Negotiations with Boeing on aircraft currently on order are also at an "advanced stage".

According to SIA, these outcomes will help to moderate the aircraft delivery stream in the near term.

The Group fleet currently consists of 222 passenger and cargo aircraft.

114 aircraft are parked at Singapore Changi Airport, while 29 aircraft are stored in Alice Springs.

There are only 39 active for the passenger network, while a total of 40 aircraft are deployed on cargo-only services.

SIA Group plans to raise an additional S$6.2 billion

Previously, the SIA Group managed to increase its liquidity by approximately S$11.3 billion, in order to deal with the Covid-19 pandemic.

According to SIA, the Group is exploring additional means to further strengthen liquidity during this time.

The airline has received approval from shareholders until its next Annual General Meeting to raise up to an additional S$6.2 billion through the issuance of Mandatory Convertible Bonds.

Totally unrelated but follow and listen to our podcast here

Top image via SIA.