It’s been a busy two months for Singapore Airlines Limited (SGX: C6L), or SIA.
The airline saw a strong surge in demand for air travel as the Singapore government extended the vaccinated travel lane (VTL) scheme to more countries.
The pent-up demand was understandable as border closures had effectively kept people from travelling for almost two years.
Last Thursday, SIA also reported its fiscal 2022 first half (1H2022) earnings for the period ended 30 September 2021.
Although the carrier still incurred a net loss, both its financial and operating numbers showed significant improvement as the world slowly reopened.
Here are five highlights from the airline’s latest earnings report.
1. Healthier financial numbers
Total revenue for 1H2022 surged by 73% year on year to S$2.8 billion as new travel corridors led to a resumption in air travel.
Passenger traffic grew five-fold year on year as a result of VTLs and the easing of pandemic restrictions.
Despite the upturn, SIA reported an operating loss of S$618 million, a 66.8% year on year improvement over the prior year.
Net loss came in at S$837 million, significantly lower than the S$3.5 billion net loss a year ago which included an impairment of S$1.6 billion for surplus aircraft.
2. Continued capacity improvement
SIA is enjoying sequential improvement in its operating statistics.
During its fiscal 2021 first quarter from April to May 2020, passenger capacity was just 3.8% as numerous countries shut their borders due to the COVID-19 outbreak.
Fast forward five quarters and passenger capacity has improved to 32.2%.
The airline expects passenger capacity to hit 43% of pre-COVID levels by the end of this year, with its network covering 73 destinations including Singapore.
Cargo capacity also surged to 62.8% during the quarter of pre-COVID levels, with cargo revenue hitting a record high of S$1.88 billion, up 51.2% year on year.
3. Growing its fleet of aircraft
As of 30 September 2021, SIA had an operating fleet of 178 aircraft comprising 171 passenger aircraft and seven freighters.
The group has one of the youngest fleets in the industry with an average age of just six years.
By 31 March 2022 (FY2022), the airline expects to take delivery of 15 more aircraft, increasing its total fleet size to 193 aircraft.
4. Customer engagement initiatives
SIA continues to emphasize the importance of customer engagement.
It launched the Singapore Showcase in August to support and collaborate with leading Singapore brands to offer unique experiences for its global customer base.
From January 2022, a new line of health-focused meals and exercise options will be made available on some of its long-haul US routes as the airline partners with California-based Golden Door, a world-famous health and wellness retreat.
KrisFlyer, SIA’s long standing loyalty programme, has also transformed.
More than 245 new non-airline partners were added during 1H2022, such as AIA (SEHK: 1299), CapitaSTAR and Dream Cruises.
Membership has increased by 4% year on year to around five million members, and milestone rewards have been introduced to encourage more frequent usage of the programme.
5. Seizing VTL opportunities
SIA has been quick to ramp up operations to capture opportunities presented by the expanding VTL scheme.
It now operates VTL flights from 21 cities in 14 countries as of the time of writing.
Strong booking demand for premium cabins has been observed, a sign that people are willing and able to spend after being cooped up for many months.
VTL flights saw a seven-fold increase in bookings since the first VTL was announced.
The airline has activated 92% of its pilots and 86% of its cabin crew as of November 2021.
The majority of the crew are deployed to at least one flight per month to maintain up-to-date knowledge of the latest procedures.
With more VTLs slated to be launched, including those with Australia and Malaysia, SIA is in a good position to capture more incremental demand for air travel.
Get Smart: A path towards normalcy
Although SIA is still incurring losses, the good news is that it has greatly reduced its cash burn rate.
With more VTLs planned, higher vaccination rates and more countries willing to open their borders, the airline can look forward to a new normal soon where air travel can resume safely.
As SIA trudges on, investors can look forward to better days ahead as both passenger and cargo capacity continue to recover.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
