The Singapore Airlines Group has seen a surge in demand for air travel in the quarter ending December 2023, with particular growth stemming from a rebound in North Asia. This resurgence comes after China, Hong Kong SAR, Japan, and Taiwan fully reopened, leading to a significant 29.4% year-on-year increase in passengers carried by SIA and Scoot, totaling 9.5 million. The Group’s passenger load factor (PLF) also saw an improvement of 0.8 percentage points, reaching 88.2%, as passenger traffic grew 19.1%, outstripping the capacity expansion of 17.9%.
Quarterly revenue for the Group reached a new high of $5,082 million, marking a 4.9% increase from the previous year and exceeding $5,000 million for the first time in its history. A notable contribution to this achievement was passenger flown revenue, which experienced a $398 million (10.6%) rise to $4,165 million, notwithstanding a 7.4% fall in passenger yields. However, cargo flown revenue witnessed a decline of $303 million (35.1%) to $559 million, despite cargo loads rising by 3.9%, buoyed by strong year-end demand, particularly from the e-commerce sector.
The Group’s expenditures increased to $4,473 million, up by $382 million (9.3%), comprising a $261 million (9.5%) rise in non-fuel expenditure and a $121 million (9.1%) increase in net fuel cost. The escalation in net fuel cost was primarily influenced by a more substantial volume uplifted and a lower fuel hedging gain, slightly mitigated by a 6.6% decrease in fuel prices.
Despite a decrease in operating profit by $146 million (19.3%) from the previous year to $609 million, the Group’s net profit showed improvement, growing by $31 million (4.9%) to $659 million. Factors contributing to this increase include a lower tax expense, a shift from a share of losses to a share of profits of associated companies, a surplus on disposal of aircraft and spares, and a higher net interest income.
Looking at the nine months leading to December 2023, the Group reported record revenue of $14,244 million, up by $981 million (7.4%), and a record net profit of $2,100 million, a 35.0% increase from the previous year. These figures were buoyed by significant increases in passenger flown revenue, partially offset by reductions in cargo flown revenue, alongside decreases in net fuel cost due to falling fuel prices.
The Group’s balance sheet as of December 2023 showed shareholders’ equity of $15.6 billion, a decline from March 2023, primarily due to partial redemptions of Mandatory Convertible Bonds (MCBs). This also led to a decrease in cash and bank balances, which stood at $10.5 billion after accounting for the redemptions, repayment of borrowings, and dividend payments.
In terms of fleet and network development, the Group had an operating fleet of 202 passenger and freighter aircraft with an average age of seven years and one month as of December 2023. It has been actively expanding and adjusting its services, including reinstating flights to key destinations in China and ramping up services to Japan and Italy for the Northern Summer 2024 operating season. The Group also anticipates returning to pre-pandemic capacity levels within the 2024/25 financial year.
Strategically, the Group is moving forward with the proposed merger of Air India and Vistara, aiming to strengthen its presence in the Indian market. Additionally, SIA and Scoot have committed to ensuring 5% of their total fuel requirements will come from sustainable aviation fuels by 2030, highlighting their dedication to achieving net zero carbon emissions by 2050.
Looking ahead, while demand for air travel remains strong, the Group is mindful of challenges such as increased competition, geopolitical and economic uncertainties, high fuel prices, and inflationary pressures. Despite these potential headwinds, the SIA Group plans to remain flexible, vigilant to revenue and growth opportunities, and committed to maintaining cost discipline. The Group’s strategic focus will continue on expanding its network, enhancing its product and service offerings, and leveraging technology to boost revenue, operational efficiencies, and productivity.
