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Pandemic Preparations Propel Singapore Airlines to Record-Breaking Profits

The Singaporean flag carrier's annual profits of more than $1.6 billion in the 12 months up to April 2023 is the biggest in its 76-year history, and follows three straight years of losses

by Lauren Smith

May 16, 2023

Photo: Singapore Airlines, Airbus A350. Courtesy of shawnanggg / Unsplash.

The Singapore Airlines group posted a record annual profit of S$2.16 billion (US$1.63 billion) for the year to April, saying preparations it made during the pandemic allowed it to capitalize on resurgent passenger demand.

The buoyant results follow three straight years of losses, including a S$962 million (US$718.4 million) net loss during the 2021/22 financial year, as the coronavirus crisis grounded air traffic and closed borders, including Singapore’s.

However, the airline said its “proactive strategic initiatives” and “pre-emptive preparation” during this time allowed it to spring back into action when restrictions were lifted.

Photo: Singapore Airlines, Airbus A350-900. Courtesy of Saif Zaman / Unsplash

The group retained most of its staff during the crisis and kept most of its fleet operational at low utilization levels. That enabled its two carriers— flag carrier Singapore Airlines (SIA) and low-cost subsidiary Scoot—to ramp up operations last year while other airlines struggled to restaff and relaunch mothballed aircraft.

The two airlines were among the first to resume flights when Singapore opened its borders in April 2022 and was well-positioned to capture pent-up demand throughout the following year. By the end of March 2023, passenger capacity across the group’s carriers had reached 79% of pre-pandemic levels.

Collectively, SIA and Scott carried 26.5 million passengers during the 2022-23 financial year, six times the number in the previous year. As a result, their passenger load factor climbed by 55.3% to 85.4%.

Revenue from passenger travel increased four-fold and was the main driver behind the group’s wider doubling of revenue to S$17.8 billion (US$13.3 billion).

The group expects passenger demand to remain strong across all cabin classes over the next year and pointed to particularly strong advance bookings for flights to China, Japan, and South Korea.

Photo: Scoot, Boeing 787-9 Dreamliner. Courtesy of Boeing.

To take advantage of pent-up demand, Scoot will resume budget flights to several cities in China, including Haikou (HAK), Ningbo (NGB), Xi’an (XIY), Nanning (NNG), Shenyang (SHE), Jinan (TNA), and Nanchang (KHN) for the first time since early 2020.

Scoot will also up flight frequencies to the Chinese cities of Fuzhou (FOC), Guangzhou (CAN), Hangzhou (HGH), Tianjin (TSN), and Zhengzhou (CGO), as well as to Athens, Greece (ATH); Langkawi (LGK) and Penang (PEN) in Malaysia; Makassar (UPG) and Manad (MDC) in Indonesia; and Perth, Australia (PER).

To meet summertime demand, SIA will also introduce additional flights to European destinations Barcelona (BCN), Frankfurt (FRA), and Rome (FCO), and resume service to Busan (PUS) in August.

However, SIA is also pulling out of some markets and will halt its service to Australia’s Gold Coast (OOL) in July and suspend its Vancouver (YVR) flight from October.

The group expects competition to stiffen as other airlines return to the air, especially on international routes. However, the group said it would be “agile and nimble” in its response.

Photo: Singapore. Courtesy of Swapnil Bapat / Unsplash

Strong returns from passenger travel were more than enough to offset a 17% year-on-year decline in revenue within the group’s cargo business, with loads and yield down as supply chains continue to suffer. Singapore Airlines said its cargo business’s performance was simply “moderating” from its pandemic peak and said takings were still the second-highest in its history. However, it expects demand for cargo to “remain soft” over the next few years as inventory levels “recalibrate” to pre-pandemic levels.

The groups’ costs also rose 83% year-on-year to S$15 billion (US$11.2 billion), driven by high international fuel prices. The group said its fleet—one of the youngest and most fuel-efficient in the industry—means it’s well-positioned to weather turbulence in the fuel markets.