SIA still in the red for FY2022, but narrows loss to S$962m
Forward sales in the next 3 months up to August 2022 are approaching pre-pandemic levels, said SIA.
SINGAPORE Airlines : C6L +1.88% (SIA) clocked its third annual loss, posting a deficit of S$962 million for the financial year 2022 to March, even as it disclosed that its forward sales for the next 3 months are approaching pre-pandemic levels.
In its third quarter to December 2021, SIA recorded its first quarterly earnings since the pandemic started to hit its financials in early 2020. But the airline group failed to sustain profitability in its fourth quarter to March, the financial results released on Wednesday (May 18) showed.
For Q4 FY2022, the flag carrier was in the red by S$210 million &mdash though it was about one-third of the net loss it incurred for the corresponding period in FY2021. Group revenue more than doubled to about S$2.5 billion, compared to S$1.1 billion for Q4 FY2021.
Its H2 results were a significant improvement over H1&rsquo s and the corresponding period a year ago. This was due to the borders in almost all of SIA&rsquo s key markets having reopened, and the rapid expansion of the game changer, Vaccinated Travel Lanes (VTLs). Improvement in share of results of joint venture and associated companies also contributed to the better showing.
The VTL scheme by Singapore allowed quarantine-free travel into the city-state for the first time since the pandemic began. National carriers SIA and Scoot were among the first to launch flights for all VTL points, which enabled them to capture the pent-up demand for air travel, said SIA in a statement.
East Asia was SIA&rsquo s top revenue-generating region in H2, contributing to more than half of its sales. Europe came behind it in second place.
SIA&rsquo s net loss was S$125 million for H2 FY2022, compared to deficits of S$837 million for H1 FY2022 and S$804 million for H2 FY2021.
Group revenue stood at S$4.8 billion for H2, with the increase mainly driven by a near-tripling in passenger flown revenue vis-à -vis H1, as passenger traffic improvement outpaced the ramp-up in capacity. Freight revenue was going strong, with a 31.4 per cent rise over H1, underpinned by higher yields and loads carried.
For FY2022, SIA&rsquo s revenue stood at S$7.6 billion, double that of FY2021, as passenger flown revenue quadrupled year on year to S$2.8 billion on a 6-fold jump in traffic, while freight revenue surged by 60.2 per cent to a record S$4.3 billion.
But costs rose 30 per cent &mdash in tandem with the higher traffic and amid higher jet fuel prices, as net fuel costs more than doubled. Impairment charges for aircraft of S$51 million were recorded for the year.
While it incurred a net loss for FY2022, the group recorded an operating cash surplus of S$824 million for the financial year, compared to having burnt through cash in FY2021.
Loss per share was 16.2 cents, lower than the restated loss of 102.6 cents for FY2021.
No final dividend was declared &ndash the same as the prior financial year &ndash as SIA noted that significant loss was incurred for the financial year and the need to conserve cash.
Net asset value per ordinary share was S$7.55 as at Mar 31, higher than the S$5.36 as at Mar 31, 2021.
As travel demand continues to recover, passenger capacity is expected to rise to around 67 per cent of pre-pandemic levels by September, said SIA.
And it noted that key markets around the world have further eased travel restrictions, supporting a &ldquo strong recovery in demand for air travel across all cabin classes&rdquo . Forward sales, when measured as a percentage of the total number of seats available, in the next 3 months up to August 2022 are approaching pre-pandemic levels.
The carrier noted significant improvement in passenger traffic in April in its operating statistics released on Tuesday.
But cargo demand is expected to experience near-term volatility as a result of the Russia-Ukraine conflict, as well as the knock-on effects of pandemic controls in China on the global supply chain. Yields, however, are likely to remain healthy due to the continued industry capacity crunch on key trade lanes, said SIA.
The carrier, however, flagged inflationary pressures, in particular on fuel prices. In comparison to the average jet fuel price of about US$90 per barrel before hedging for FY2022, spot prices have moved up by more than 50 per cent and were close to US$150 per barrel as of early May.
SIA stated that it will maintain &ldquo appropriate&rdquo discipline over cost, even as operations expand in line with demand.
The counter hit a near 3-week high at S$5.50 in early trading hours on Wednesday, ahead of the release of the national carrier&rsquo s financial results in the evening. This came after DBS Group Research upgraded its call on SIA to &ldquo buy&rdquo from &ldquo hold&rdquo and upped the target price to S$6.20, given that the airline&rsquo s recovery is likely to be earlier than expected.
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