SATS has reported a loss of $29.9 million for the 1QFY2024 ended 30 June, its first set of financial statements reported following the successful completion of the acquisition of Worldwide Flight Services (WFS) in April.

 

The loss is due to the one-off integration costs related to the integration of Worldwide Flight Services (WFS), which amounted to $12.6 million.

 

Excluding the integration-related one-off expenses, the underlying core patmi loss narrowed to $17.4 million compared to a loss of $19.5 million, which included government reliefs of $9.4 million, in 1QFY2023.

 

This $17.4 million accounted for expenses for refinancing of WFS bonds and integration related expenses, including interest on EUR 500 million acquisition loans and the incremental lease accounting expenses upon adoption of Singapore Financial Reporting Standards (International) by WFS.

 

This brings its loss per share to 2 cents, lower than the 1.6 cents loss per share recorded in the same period a year ago.

 

Despite the recorded losses, SATS&rsquo group revenue increased $823.1 million to $1.2 billion in 1QFY2024 from $375.5 million in 1QFY2023 due primarily to the revenue contribution from WFS and increase in flights handled, which has recovered to 81% of pre-pandemic levels.

 

With the acquisition of WFS, the group saw a 215% y-o-y increase in flights handled to 145,900 and a 205% increase in cargo volumes y-o-y to 1.8 million tonnes. Meals served in aviation increased 120% from a year ago to 12 million in tandem with travel recovery.

 

Share of results of associates/joint ventures improved by $14.4 million to $21.3 million from $6.9 million in the corresponding period a year ago as the performance of most associates and joint ventures in the aviation sector improved in tandem with the global aviation recovery post-pandemic.

 

The group&rsquo s expenditure amounted to $1.2 billion in 1QFY2024, driven by the increase in business activities and consolidation of WFS, with staff cost comprising 59% of expenditure.

 

SATS operating profit came in at $10.2 million, compared to an operating loss of $34.3 million a year ago. This is notwithstanding the discontinuation of government reliefs in the current quarter and the inclusion of one-time restructuring and liability management (LM) costs totalling $13.3 million related to the integration of WFS.

 

Cash or cash equivalents amounted to $562.0 million and a debt-to-equity ratio, including lease liabilities, of 1.68 times. The group has completed the redemption of EUR Senior Secured Notes and USD Senior Secured Notes issued by WFS through loan facilities of EUR 1.04 billion ($1.54 billion). This will result in net interest savings of over S$40 million annually for the Group until the notes&rsquo maturity date in 2027.

 

SATS notes that the growth momentum in the aviation industry continues, with optimistic projections from IATA, ICAO, Boeing, and Singapore&rsquo s Ministry of Transport (MOT).

 

IATA estimates that global air traffic will reach 88% of pre-pandemic levels in 2023 and 100% by 2024, while MOT anticipates that Changi Airport, currently operating at approximately 90% of pre-pandemic levels, will fully recover by the first half of 2024.

 

Kerry Mok, president and chief executive officer of SATS said: &ldquo The underlying performance of the enlarged SATS Group remains resilient, despite the recent slow-down in the air-cargo market. We are laser-focused on restoring profitability and driving productivity across the group through operational excellence and have seen early wins. As part of integration initiatives, we have successfully refinanced our debt delivering interest savings of $40 million annually. We will continue to realise synergies and drive value creation from the Group&rsquo s enlarged global network.&rdquo