Singapore Airlines reports heavy Q1 losses, defers Airbus deliveries

A Singapore Airlines Airbus A350-900 slows down at Singapore Changi Airport. Photo by

Benjamin Liew | AeroNewsX

Singapore Airlines, the flag carrier of Singapore, has today reported a massive quarterly loss for the quarter which ended on the 30th June 2020. It has also announced that it has reached an agreement with European aircraft manufacturer Airbus regarding the deferral of delivery for widebody aircraft, which the carrier is currently not in a position to take due to ongoing losses and deflated travel demand due to COVID-19.

Singapore, like most other nations around the globe, has been significantly affected by the Coronavirus and forced to largely curb international travel in order to stop COVID-19 from being spread within its own borders. These restrictions have had a huge impact on all airlines based in Singapore, particularly the Singapore Airlines Group, which manages the nation's flag carrier Singapore Airlines, regional subsidiary SilkAir, and low-cost airline Scoot. When COVID-19 first affected the small nation of Singapore, it crushed most demand for travel, forcing Singapore Airlines and SilkAir to ground 138 out of 147 aircraft in their fleet, with Scoot also grounding 47 out of its 49 aircraft. Although due to the lifting of some COVID-19 restrictions Singapore Airlines has now been able to reactivate some of its fleet, the airline still remains largely grounded and is as a result, bleeding money like many other major global airlines.

Today, the Singapore Airlines Group reported its grim financials for the quarter ending 30 June, with losses of 1 billion Singaporean dollars in just three months due to a slower than expected return of passenger travel demand. This is a stark comparison to the S$200 million profit the airline made in the same quarter during 2019. The airline also reported a revenue drop of 80% compared to the same time last year, to stand at S$851 million. According to a spokesperson for Singapore Airlines, the businesses revenue was partially offset by an uptick in cargo demand, despite the obvious lack of any real passenger demand. However, this was not entirely unexpected with the airline group warning shareholders in mid-July it expected to post a loss due to "slower than expected recovery from the coronavirus outbreak."

Despite the huge losses and decrease in revenue, the airline has made good progress in cutting operating costs through a variety of measures such as staff stand-downs and fuel hedging. According to the newly announced quarterly report, the Singapore Airlines Group's operating costs decreased 51.6% to S$1.89 billion. The Singapore Airlines spokesperson attributes this drop in operating costs to lower net fuel costs and non-fuel expenses due to a large amount of the fleet being grounded.

The Singapore Airlines quarterly financial report also compared 2020 passenger numbers with the same quarter in 2019 highlighting an expected evaporation of passenger numbers. In June 2020, the Singapore Airlines Group carried just 17,700 passengers compared to 3.2 million during the same month in 2019. When measured in Revenue Passenger Kilometres (RPKs), this represented a 99% drop in passenger numbers for the group's airlines when compared with the same quarter last year and an overall capacity cut of 95%, meaning that Singapore Airlines and its sister airlines are currently operating at just 5% of their 2019 capacity.

In order to help curb losses and reduce parked aircraft, the Singapore Airlines Group has also made progress with negotiations between itself and European aircraft manufacturer Airbus to defer delivery of some of the 65 Airbus planes the group has on order for both Singapore Airlines and Scoot, but the airlines spokesperson declined to elaborate on exact details of the deal. At the same time, Singapore Airlines also stated it was in ongoing discussions with Boeing to defer some of the 85 Boeing the Group's airlines have on order, although no comment has been made on the progress of these discussions yet.