Singapore Airlines and its subsidiary, Scoot, recently reported a robust net profit of $734 million for the April-June quarter, doubling last year’s $370.4 million. The increase in profit mainly comes from improved operational performance (+$199 million), a shift from last year’s net finance charge to this year’s net interest income (+$144 million), and a transition from share losses to share profits of associated companies (+$81 million). However, a higher tax expense (-$62 million) partially counterbalanced these gains. This information was disclosed in the company’s earnings release.
Revenue for the quarter landed at $4.479 billion, rising from $3.928 billion, while expenses climbed to $3.725 billion from $3.372 billion. Despite the increase in expenses, fuel costs dropped 21.8 percent to $1.154 billion. From fuel hedging, the group netted $101 million, although this figure was half of last year’s hedging benefit. Operating profit also saw a significant rise, with $754.5 million compared to $556.4 million last year.
Passenger Carrying Capacity and Revenues
Parent company Singapore Airlines carried 5.5 million passengers at an impressive 88.1 percent load factor during this period. The available seat kilometers (ASK), a measure of an airline’s passenger carrying capacity, expanded by 24.8 percent to 29.4 million. Revenue per available seat kilometer (RASK), a key performance metric in the airline industry, rose 3.9 percent to 10.6 cents. The airline served 74 destinations, with plans to increase frequencies to Japan and Thailand in the coming winter season. Additionally, they will offer seasonal services between November and January to Australia and New Zealand.
Subsidiary Gains and Cargo Delivery
Scoot demonstrated substantial growth with 3 million passengers, a striking 135.5 percent year-on-year increase, and attained a load factor of 91.7 percent. With air travel in Southeast Asia and China rebounding, Scoot increased its ASK by 66.4 percent to 8.7 million, and its RASK climbed 16.7 percent to 6.3 cents. The airline expanded its reach in China with two new destinations added in July and another coming in August.
Singapore Cargo, however, experienced a 10.6 percent year-on-year decline, delivering 214 million kilograms of cargo. Despite the decline, the capacity increased 12.1 percent to 2.3 million tonnes due to the additional belly capacity on passenger flights. The yield dropped 44.3 percent to 44.6 cents but remained above pre-Covid levels.
Anticipations and Projections
Singapore Airlines eagerly awaits the approval of the proposed merger between its Indian subsidiary, Vistara, and Air India, owned by Tata Group. Both Singapore Airlines and Scoot are still pending approval to restructure their services to Hyderabad, Bengaluru, and Chennai from late October.
The SIA Group predicts that it will need another eight months until March 2024 before it reaches ninety percent of its 2019 capacity. However, the demand is expected to remain strong for all route regions through the summer peak. The airline also anticipates intensified competition as other regional and international airlines add more capacity to their international routes.
The group ended the quarter with an equity position of $17.2 billion, down $2.7 billion after redeeming $3.4 billion in Mandatory Convertible Bonds received during the Covid crisis in 2021. Its cash and bank balances stood at $13.8 billion, with debt at $14.7 billion, while $2.2 billion in credit lines remained available.
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