SIA Group’s passenger carriage shrank 97.6% year-on-year. However, when compared to the previous quarter, passenger carriage grew 44.8% on the back of a 90.8% increase in capacity for the third quarter.
Group revenue fell $3,404 million (-76.1%) year-on-year to $1,067 million during the third quarter, as all three passenger airlines within the Group recorded a sharp drop in passenger flown revenue due to low traffic. This was partially offset by improvements in cargo flown revenue, as the global airfreight capacity crunch continued to provide strong support for both load factors and yields. In response to the continued strong demand for pharmaceutical and e-commerce shipments, and an uptick in general cargo demand, SIA added capacity by stepping up the frequency of passenger aircraft operating cargo-only flights and through the resumption of more passenger services. The utilisation of the freighter fleet was also maximised to deliver more cargo capacity. Group expenditure was down $2,624 million (-65.2%) from last year to $1,398 million. Non-fuel expenditure fell significantly year-on-year, by $1,540 million (-54.7%), on the back of cost-saving initiatives such as capacity cuts and staff-related measures, as well as government support schemes. Net fuel cost declined $933 million
(-77.3%) to $274 million as capacity cuts and lower fuel prices reduced fuel cost before hedging. A net gain of $63 million was recorded for the quarter in relation to fuel hedging and fuel derivatives, comprising fuel hedging losses of $88 million, a fuel hedging ineffectiveness loss of $36 million (arising from a further downward revision to the recovery trajectory) and fair value gains of $187 million on fuel derivatives that had earlier been deemed to be ineffective hedges. As a result, the Group registered an operating loss of $331 million for the quarter, a $780 million reversal from an operating profit of $449 million last year. For the quarter ended 31 December 2020, the Group reported a net loss of $142 million, a deterioration of $457 million against last year. This was primarily driven by the weaker operating performance, partially offset by a swing from tax expense to tax credit.
non-fuel expenditure was down $4,544 million (-54.2%) to $3,833 million, attributable to various cost-saving initiatives and government support schemes. In addition to the weaker operating performance, there were also other non-cash items recorded during the first nine months, including an impairment charge of $1,333 million on the carrying value of older generation aircraft, a $127 million charge from the liquidation of NokScoot, and a $170 million write-down of goodwill recorded when SIA first gained control of Tiger Airways in October 2014. As a result, the Group swung into a $3,609 million net loss position for the nine months ended 31 December 2020 compared to the $520 million net profit a year ago.
As at 31 December 2020, the Group’s shareholders’ equity was $15.7
billion, an increase of $6.3 billion as compared to 31 March 2020. Cash and bank balances saw an increase of $4.4 billion, rising to $7.1 billion, while total debt balances increased by $0.4 billion to $12.2 billion due to the drawdown of new debt facilities. Consequently, the Group’s debt-equity ratio fell from 1.27 times to 0.78 times. In the first nine months of the financial year, SIA increased its liquidity by approximately $12.7 billion. In December 2020, SIA closed a five-year convertible bond issuance for $850 million and a private placement of 10-year Notes that raised $500 million. An $8.8 billion Rights Issue (completed in June 2020).
The Group fleet currently consists of 185 passenger and cargo aircraft. The passenger network is currently supported by about 64 aircraft. All seven freighters are fully utilised, and around 24 passenger aircraft are deployed on cargo-only services. SIA has parked 123 aircraft, including the 33 surplus aircraft that were impaired in the first half.
The Group’s total passenger capacity is expected to be at around 25% of pre-Covid levels, and we expect to serve around 45% of the points that we flew to before the crisis.
The integration of SilkAir’s narrowbody operations with Singapore Airlines will begin on 4 March 2021, when the first SIA 737-800 NG aircraft operates on the service to Phuket. This will deliver greater economies of scale for the Group and allow it to deploy the right aircraft to meet the demand for air travel as it returns.
Further to the fund-raising efforts in the first nine months of the year, SIA also issued its first USD-denominated bond in January 2021 raising US$500 million (or S$666 million equivalent). To-date, SIA has successfully raised approximately $13.3billion in additional liquidity since the beginning of the financial year. Discussions on sale-and-leaseback transactions are at an advanced stage.
SIA continues to have access to more than $2.1 billion in committed credit lines, along with the option to raise up to $6.2 billion in additional mandatory convertible bonds before the Annual General Meeting in July 2021. These liquidity measures will allow the Group to be in a position of strength as it emerges from this crisis.