A Distinct Loss in Singapore Airlines’ History
Singapore Airlines (SIA) is on track for its first-ever full‑year net loss, a stark reminder that the COVID‑19 pandemic is still raking havoc across the skies. Even though the airline posted solid results for the initial nine months of the year that wrapped up in March 2020, the big picture looks far from rosy.
Current Financial Snapshot
- Operating profit fare whispers still—just a modest burn for the year.
- Cash flows will stay negative through the April‑June quarter.
- Full annual results to be revealed on May 14.
Against this backdrop, SIA is trimming flights for a clear six weeks, a move that, combined with a March fuel price collapse, is adding fuel‑hedging losses to the pile.
Fuel Hedging Missteps
Think of fuel hedging as insurance—locking in a price to dodge future uncertainty. But when flight numbers plummet, the fuel you already bought becomes an excess, and if prices stay low, the losses keep piling up.
Drivers of the Current Crisis
- Demand for air travel has taken a nosedive.
- Most airlines are keeping their fleets grounded.
- Only 4 % of SIA and SilkAir planes are flying, and merely 2 % of Scoot’s aircraft are expected to take off in the coming months.
“We’re in uncharted waters when it comes to the size and timing of a recovery,” the group noted. “While we’re tightening costs, preserving cash, and beefing up our balance sheet, we’re also gearing up for the post‑COVID era.”
Cost‑Cutting Measures
- Management and directors are taking a 30 % pay cut.
- Union talks led to monthly no‑pay leave days for pilots and executives, with furloughs for about 10,000 staff on re‑employment contracts.
- Deferred non‑essential projects and postponed orders from aircraft manufacturers.
Virgin Australia Clarification
Despite owning a stake in Virgin Australia, the SIA Group has no financial ties or outstanding loans to the struggling carrier—not a single loss thrown into its own pot.
Industry Outlook
ICAO flags this as the first dip in global air travel in over a decade—some say a return to the gloomy days of the 2008‑2009 financial crisis.
For live updates on the coronavirus, click here. This piece originally appeared in The Straits Times; you’ll need permission to reproduce it.
