SIA posts first quarterly net profit of S$85m since onset of pandemic

FLAG carrier Singapore Airlines (SIA) C6L posted a net profit of S$85 million for the third quarter to December 2021, registering its first quarterly profit since the onset of the pandemic thanks to increased air travel and strong yields in the cargo market during the year-end period.

It also reported an operating cash surplus of S$322 million for the 9 months to December, reversing the operating cash burn that it had been experiencing since the start of the pandemic.

SIA was able to tap pent-up travel demand during the year-end holiday season as Singapore launched and expanded vaccinated travel lanes (VTLs).

"Singapore's VTL arrangements have been a game changer for the SIA group, facilitating quarantine-free mass travel for the first time since the pandemic began," said SIA in a press statement on Thursday (Feb 24).

Passenger load improved 18.9 percentage points quarter-on-quarter to 33.2 per cent for the 3 months ended December. Passenger load factor measures the percentage of available seating capacity filled by paying passengers.

However, the group noted that passenger traffic is likely to moderate in the fourth quarter as travel demand from the year-end holiday season wanes.

Cargo revenue for the quarter also ticked up as yields and loads carried were supported by robust demand and tight capacity.

Robust demand during the traditional cargo peak period was buoyed by retail inventory restocking and strong e-commerce traffic, said SIA. Overall air cargo demand is, however, expected to ease in the fourth quarter.

"This is in line with seasonal fluctuations, and the traditional slowdown in exports during the Lunar New Year holiday period," said SIA.

Group revenue for the quarter was up 117.1 per cent to S$2.3 billion, from S$1.1 billion across the same period the year before.

The expansion in operations had driven group expenditure up by 60.2 per cent year-on-year to S$2.2 billion. This was contributed by higher fuel costs, non-fuel expenditure, impact of the fuel hedging ineffectiveness recorded last year and fair value changes on fuel derivatives.

With fuel prices trending higher and volatility expected to persist, SIA said that it will continue to "keep a tight rein on costs" while supporting the expansion of operations in line with demand.

SIA reported an operating profit of S$76 million for the 3 months to December, reversing its operating loss of S$331 million the year before.

Earnings per share for the quarter stood at 1.3 Singapore cents, reversing the loss per share of 2.9 cents last year. Net asset value per share came in at S$7.45 as at Dec 31, 2021, higher than S$5.36 as at Mar 31, 2021.

By the end of the third quarter, SIA had raised S$21.6 billion in fresh liquidity since April 1, 2020, including proceeds from the 2021 mandatory convertible bonds (MCB), which raised S$6.2 billion in additional liquidity in June 2021.

Net loss for the 9 months to December shrank to S$752 million from S$3.6 billion for the corresponding period last year.

SIA's revenue for the 9 months was up 90.4 per cent to S$5.1 billion from S$2.7 billion the year before due to better operating performance.

Loss per share narrowed to 13 cents for the 9 months to December versus the loss per share of 91.4 cents in Q3 the previous year.

Shares of SIA ended Thursday at S$4.94, down S$0.33 or 6.3 per cent, before results announcement.