A Singapore Airlines passenger jet at Changi International Airport terminal, 8 June, 2020. (PHOTO: Roslan RAHMAN via Getty Images)
Singapore Airlines Ltd., consistently voted one of the world’s best airlines by Skytrax, is poised for another hefty quarterly loss after the coronavirus left it flying a tiny fraction of its usual number of passengers.
The airline warned this month that it expects a material operating loss in its fiscal first quarter. It already suffered a record net loss of S$732 million ($530 million) in the three months through March, when it was hit by fuel-hedging losses as well as a collapse in demand triggered by the outbreak. That left the carrier with its first annual loss in its 48-year history.
The net loss could widen to S$1.2 billion for the quarter through June and revenue may slump 87% because of a 96% drop in capacity, according to Bloomberg Intelligence analysts James Teo and Chris Muckensturm. Fuel-hedging losses will again take a toll, and this time there are also S$124 million in liquidation costs for NokScoot Airlines Co. Singapore Airlines owned a 49% stake in the low-cost Thai carrier that collapsed in June.
The Covid-19 pandemic continues to torment the global aviation industry, which is forecast to take at least another three years to recover from the plunge in traffic caused by tight border controls and a reluctance to travel.
Singapore Airlines is in a particularly tight spot as it is dependent on international flights. The carrier and its SilkAir and Scoot units flew 17,700 passengers in June, compared with 3.2 million a year earlier.
“Progress towards a global lifting of border controls and travel restrictions, which could facilitate or result in the easier movement of travelers between countries, is slower than earlier expected,” Singapore Airlines said on July 15.
The airline, which has raised about S$11 billion through loans and a rights issue in June, said at its annual general meeting Monday that passenger traffic could take two to four years to recover. The company will release a first-quarter business update after trading hours Wednesday.
Singapore Airlines’ shares slipped 0.3% to close at S$3.61. They’ve slumped 43% this year, among the worst performers on a Bloomberg gauge of carriers in the Asia Pacific region.
Unlike many of its peers, the carrier hasn’t cut any jobs, though it has redeployed some staff to work at hospitals and on the city state’s public transport network. The government is spending S$93 billion -- 20% of gross domestic product -- to help people stay in work and support businesses.
Yet job cuts aren’t being ruled out at Singapore Airlines, the Straits Times cited Chief Executive Goh Choon Phong as saying last month. The carrier, whose shares are down 43% this year, had about 28,000 staff as of the end of March.
Singapore Airlines is gradually restoring some routes, but there have been setbacks as fresh outbreaks flare up in places such as Melbourne, forcing it to suspend services to the Australian city. The airline expects passenger capacity in August and September to only be about 7% of pre-pandemic levels.
Future of Singapore Airlines' A380s in limbo as network, fleet reviewed
The fate of Singapore Airlines' flagship Airbus A380s will be decided in the next three months following an extensive review of both the size and shape of the airline's network, and the jets needed to fly it.
After revealing a staggering $1bn loss in the April-June 2020 quarter, at a time when the airline's parent group SIA – which also comprises regional carrier SilkAir and low-cost operator Scoot – saw a 99.5% drop in passenger traffic due to the Covid-19 pandemic, the stage is set for an unsteady and drawn-out recovery.
Even by the end of March 2021, "the Group’s passenger capacity may reach less than half of its pre-Covid-19 levels," the airline said in a statement.
In an effort to right-size itself to suit the long years ahead, the company said "we are reviewing the potential shape and size of our network over the longer term given COVID-19 and its impact on our passenger traffic and revenue, which will provide better clarity on the fleet size and mix that the group will need."
Some of this will hinge on delaying the delivery of new aircraft "to reduce near-term cash outflows," the airline said. "We have reached an agreement with Airbus on some of these matters and discussions with Boeing are ongoing. This will help to moderate fleet growth in the near term."
Singapore Airlines is believed to have some 90 jets on order, compared to around 120 already in its fleet, with another 60 orders shared between SilkAir and Scoot.
The subjects of those discussions will include the Airbus A320neo and A321neo, the Boeing 737 MAX, the Boeing 787 Dreamliner and the Boeing 777-9: the later of which has already been pushed back until 2022 and is set to be the launchpad for Singapore Airlines' latest first class suites and business class seats.
But this still leaves a superjumbo-sized question mark hanging over the Airbus A380.
All 19 of the airline's double-decker juggernauts have been grounded since March, with 13 parked at Changi Airport while six – a mix of older and newer versions – now reside at the longer-term Asia Pacific Aircraft Storage facility in Alice Springs, where the arid climate and low humidity helps keep aircraft in top condition until they're ready to fly again.
Singapore Airlines has already flagged that its fleet review "is likely to lead to a material impairment of the carrying values of older generation aircraft, particularly the A380 aircraft which would account for approximately $1 billion."
Singapore Airlines was the prestigious launch customer for the Airbus A380 in October 2007, and from December 2017 added a second tranche of newer A380s sporting upgraded first and business class designs.
However, Airbus is winding down production of the A380 - the final superjumbo is now being assembled, despite questions over if customer Emirates intends to even pick up the keys – and other airlines around the world have stood down the A380 as being simply too large a plane to fill with passengers at a time when few people are flying.
"The recovery trajectory in international air travel is slower than initially expected," Singapore Airlines admits.
"Industry experts have continued to revise downwards their projections for the recovery of global passenger traffic in the near term. Industry forecasts currently expect that it will take between two to four years for passenger traffic numbers to return to pre-pandemic levels."
Air France has already announced it will scrap its 10-strong A380 fleet, while Lufthansa will decommission six of 14 A380s.
Qantas has mothballed all 12 of its A380s until at least 2023, and warns that as few as half may return to the skies. Qatar Airways has stated that its A380s "will not return for at least a year, maybe never."
Emirates, however, remains bullish and says it hopes to have all of its 115 A380s flying again by early 2022.
"The A380 has defined us," Emirates President Sir Tim Clark says of the planned superjumbo surge. "As demand returns, and given the slot availability at prime hubs, there will be a place for it. I’m hoping by April 2022, all our A380s will be flying again."
https://www.executivetraveller.com/news/future-of-singapore-airlines-a380-in-limbo-as-network-fleet-reviewed
Alpa-S buaysong SIA planning to slash pay of pilots liao.......
https://www.businesstimes.com.sg/companies-markets/air-line-pilots-association-disagrees-with-sias-cost-cutting-measures
SIA Engineering joint venture reportedly retrenched 144 employees within 3 days in July
An SIA Engineering joint venture has been accused by its employees for being overly "radical" with its retrenchment exercises.
SIA Engineering joint venture allegedly laid off 144 employees in two retrenchment exercises
Eagle Services Asia Pte Ltd, an aircraft Maintenance, Repair and Overhaul (MRO) joint venture between Singapore Airlines (SIA) Engineering Company and original equipment manufacturer Pratt & Whitney, reportedly executed two retrenchment exercises within three days, according to Chinese daily Lianhe Wanbao.
Around 144 employees were reportedly retrenched by the company, according to employees who spoke to the Chinese daily.
However, many workers were unhappy with how the retrenchment exercises were executed, as they were only informed that they were on the list of workers being axed after arriving at work, and had to pack up and leave the place as soon as they received the notice.
Many employees were upset that they were not informed beforehand, and that the company failed to provide them with a reason for retrenching them, instead urging them to quickly leave the premises.
An ex-employee interviewed by the Chinese daily said, "I understand that the company needs to retrench workers, but they should at least treat us with respect!"
An unnamed reader told Lianhe Wanbao that 31 employees were suddenly laid off by the company on July 22.
A number of employees were called into the office at 10am that day, and only then was the retrenchment made known.
According to the reader, he was not part of the group being retrenched, but the company had failed to explain clearly how many employees were being laid off, resulting in some panic among the workers.
Based on the reader's understanding, the National Trades Union Congress (NTUC) later stepped in to negotiate with the company.
More at https://mothership.sg/2020/07/sia-engineering-eagle-services-asia-retrench/
SIA CEO still taking home millions - where got crisis?
Pinkie has already said die die also cannot let SIA fail.
https://www.straitstimes.com/singapore/transport/no-effort-will-be-spared-to-see-sia-aviation-sector-through-crisis-pm
Swooping in to buy when SIA's share price drops below $3.