It has clocked higher revenues from passengers and freight flown and also made gains in fuel hedging, for instance

 

SINGAPORE Airlines (SIA) could face a rough few months ahead as the world tackles a resurgence in Covid-19 infection rates.

 

For the moment, however, eyes are turned to its results for the financial year ended March 31, 2021, due out this Wednesday - a set of figures which could show its efforts to rebuild its business over the past year.

 

Its revenue, in particular, seems likely to finish FY2021 on a firm note. Based on SIA' s monthly operating statistics, the airline group flew a total of 246,200 passengers in January, February and March, or 25.9 per cent more than for the preceding three months.

 

The airline group also logged 1,137.4 million passenger-kilometres during Q4 FY2021, which was 22.5 per cent more than it did during Q3 FY2021.

 

The national carrier reported a marginal 2 per cent quarter-on-quarter increase in freight traffic at 1,182.4 million tonne kilometres for Q4 FY2021.

 

Given these operating numbers, the group might have chalked up passenger flown revenue of some S$224 million in Q4 FY2021, versus S$183 million in Q3 FY2021, assuming passenger yield stayed level at 19.7 cents per kilometre.

 

The group clocked yields between 17.9 cents and 22.2 cents for the earlier three quarters.

 

As for cargo revenue, if the yield was flat at Q3 FY2021' s rate of 64.2 cents per tonne-kilometre, then SIA would have generated S$759 million in the fourth quarter, versus S$744 million in the preceding quarter. The carrier' s cargo yields were in the range of 60.5 cents to 81.1 cents for the first three quarters.

 

Passenger and cargo revenue aside, the airline group also generated revenue from other sources, including contributions from its subsidiary SIA Engineering these other sources averaged about 15 per cent of the total revenue in the past three quarters.

 

SIA Engineering reported a steady top line for each of the four quarters of FY2021. Revenue for Q4 FY2021 came in at S$115.4 million, up from the S$104.6 million in Q3 FY2021.

 

With higher revenue from passenger and freight flown as well as possibly greater contributions from SIA Engineering for Q4 FY2021, it is logical to expect the airline group to report a top line that is higher than the S$1.06 billion it reported for Q3 FY2021.

 

In fact, its top line could be the highest in the four quarters. The flag carrier had reported S$783 million and S$851 million in top line for the second and first quarters respectively.

 

Handicapping SIA' s profit numbers is a much trickier exercise though.

 

For the first three quarters of FY2021, SIA' s non-fuel expenditure was fairly stable at between S$1.27 billion and S$1.29 billion each quarter. Thus, one could expect the airline group to have spent about the same amount in Q4 FY2021.

 

Its fuel cost pre-hedging should be higher in Q4 FY2021 though, as passenger distance travelled increased amid a rising oil price environment. Crude oil price spiked to about US$70 a barrel in March.

 

However, SIA could shrink its fuel hedging ineffectiveness loss. This amounted to as much as S$464 million in Q1 FY2021 when crude oil plunged to below US$20 a barrel in April.

 

SIA has hedged more than half of its anticipated fuel needs at average prices of US$74 per barrel for jet fuel, or US$58 per barrel in Brent crude oil hedges for the financial year.

 

As a result, it recorded a gain of S$63 million in relation to fuel hedging and fuel derivatives in Q3 FY2021 as oil prices climbed. With oil prices even higher in Q4 FY2021, another gain could be on the cards for that quarter.

 

Finally, given it had made an impairment of over S$1.4 billion to its fleet in Q2 FY2021, it seems unlikely that it will be hit by another huge write-down in Q4 FY2021.

 

So, all things considered, amid the continued Covid-19 turmoil, SIA might report reasonably firm numbers later this week.