Singapore, Aug 1 (ANI): Singapore Airlines Group (SIA), co-owner of Indian carrier Vistara, reported its highest-ever first quarter operating profit of SGD 556 million (US$ 403 million) last week on “demand in passenger growth”. . This is the second-highest quarterly operating profit in the airline’s history.
This comes after it dipped into positive territory with a SGD10 million (US$7.2 million) profit for the second half of its last financial year when it reported its full earnings in May. For the first half of the same fiscal year, it reported an operating loss of SGD 620 million. SIA’s financial year is from April to March.
SIA Group recorded a first-quarter net profit of SGD 370 million (US$268 million), compared to a loss of SGD 210 million in the last quarter of the previous financial year, an improvement of SGD 580 million. The airline attributed this to better operating performance which was up SGD623 million, as well as a SGD66 million shortfall in non-cash impairment charges, which was partially offset by tax expense incurred against a tax credit last quarter of SGD 95 million.
The lower share of losses of related companies such as Vistara also improved its performance by SGD 25 million.
SIA achieved the exceptional quarter by carefully calibrating its response to the pandemic and preparing to receive demand.
In a statement, SIA said: “The SIA Group has proactively reviewed all aspects of our operations since the start of the pandemic, ensuring that the entire organization is ready to respond rapidly to changes in the operating environment.
Singapore Airlines and Scoot have been among the first to launch services and begin sales at serviced outlets outside Changi Airport since restrictions began to ease in September 2021. The group’s capacity increased by an average of 47 percent from pre- pandemic in the fourth quarter of FY2021/22 to 61 percent in the first quarter of FY2022/23, allowing it to capture significant pent-up demand.”
Unlike in Europe where airlines had to cut flights to manage travel demand, SIA is increasing the number of flights.
With demand for travel increasing, the industry at large is finding itself unable to hire and train workers fast enough after laying off thousands of workers during the pandemic. It is also unable to return mothballed aircraft to service quickly enough.
Earlier in July, British Airways said in a statement to NBC News that it was canceling another 10,300 short-haul flights through the end of October. He added: “British Airways will cut more flights during the crucial summer holiday months as airlines and airports across Europe struggle to keep up with strong post-pandemic demand from holidaymakers. The entire aviation industry continues to face with significant challenges and we are fully focused on building resilience into our operations to give customers the security they deserve.”
Similarly, KLM and Lufthansa also issued statements to its customers saying they would have to cut flights to ensure service reliability and safety. This is due to the lack of manpower not only in the airlines, but also in the partner service providers at the airports.
Lufthansa said in its statement: “With the start of the Northern Hemisphere summer and with global travel restrictions now almost all lifted, everyone involved in aviation around the world is almost daily reaching the limits of the resources that are currently available . And the growth of the complex Air Transportation System from almost zero to now almost 90 percent is clearly not continuing with the reliability, consistency and punctuality that we would like to provide you again.”
Dutch airline KLM said: “Labour pressure at the airport is currently relentless as Schiphol and KLM both face staff shortages. KLM’s measures are aimed at restoring operational stability, thus easing the pressure on staff at Schiphol and KLM. Until now August 28, we will cancel every day 10 to 20 round-trip flights to European destinations.
The reduction in flights to Europe and the increase in demand has resulted in increased flight prices.
A search for August flights on airline websites showed that a return economy ticket from Singapore to Munich on Lufthansa costs US$1,600, while an SIA ticket from Singapore to London costs almost US$3,000. These used to cost around USD 900 before COVID.
This has benefited the more prepared Singapore Airlines, which is busy adding flights to its network.
In its statement accompanying the financial results, it said that SIA and low-cost subsidiary Scoot are adjusting their networks in the Northern Winter operating season (30 October 2022 to 25 March 2023). SIA will increase services to points across Japan, restore its Indian network to pre-pandemic levels, add more flights to Los Angeles and Paris and continue its direct services to Vancouver. Scoot will launch non-stop services to Tokyo (Narita) and Osaka, as well as add more flights to Bangkok, Cebu, Manila, Seoul and Surabaya. The group’s capacity is expected to reach about 68 percent of pre-pandemic levels by September and about 76 percent by December.
Earlier this month, SIA had announced that it plans to progressively restore all its flights to India to pre-pandemic levels by the end of October. It will gradually increase the frequency of flights and operate 17 weekly services to Chennai, up from the current 10 weekly flights. The Kochi services will go up to 14 times a week, up from the current seven flights a week. Services to Bengaluru will go up to 16 times a week, up from the current seven flights a week.
SIA expects travel demand to remain strong in the short term and future sales to remain stable for the next three months to October 2022.
However, he warned that, “Inflationary pressures including elevated fuel prices remain a concern. Rising interest rates and slowing economic growth in many countries around the world, including the SIA Group’s key markets, are risk factors for the recovery of passenger journeys and demand for air cargo that we are closely monitoring.
(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a shared source.)