Singapore Airlines Prepares For Its First Full-Year Loss

Despite a strong start to the 2019/20 financial year, the coronavirus has knocked the SIA Group down substantially.…

Singapore Airlines Prepares For Its First Full-Year Loss

Despite a strong start to the 2019/20 financial year, the coronavirus has knocked the SIA Group down substantially. The group, which includes Singapore Airlines, SilkAir and Scoot is expected to post its first full-year loss in its 48-year history when it releases results on Thursday. Over the past, it’s had close shaves due to various other global catastrophes. Yet the coronavirus pandemic is proving to be a hurdle like no other.

The SIA Group is expected to post its first loss in history on Thursday. Photo: Getty Images

A promising start to the year

Despite a promising nine months of the 2019/2020 financial year, the SIA Group is expected to announce a full-year loss later next week. The group, which comprises three Singaporean-based airlines, is not hopeful for any profit for the full-year, which begins 01 April and ends on 31 March. Should this come to pass, it will be the first year on record that the SIA Group has not made a profit over the course of a full 12-month period.

Back on 14th February 2020, the airline posted a financial report for the quarter between October 2019 and December 2019, which was its third quarter of the fiscal year 2019/20. At that time, it was able to drive net profit up by 10.9% compared to the same quarter the year before. What’s more, the carrier also posted a 15.7% increase in operating profit for that quarter.

The growth in Q3 of FY2019/20 provided a lot of hope for final year figures. In the full nine months that had been recorded at that time, operating profits were up 5.9% in the fiscal year. In addition, net profit was also up by 8.3% for the group to $520m.

Singapore Airlines A380
Singapore Airlines had a promising nine months before the pandemic. Photo: Kentaro Iemoto via Wikimedia Commons

However, fast forward a few short months, and the SIA Group is now staring in the face of its first loss.

First full-year loss in the SIA Group’s history

For so many airlines, the past fiscal quarter was not the one they had hoped for. The next one isn’t looking to be any better.

For the SIA Group, the coronavirus pandemic has had a devastating effect on its capacity. Just 4% of Singapore Airlines’ fleet is in operation. The same is true for SIA subsidiary SilkAir. On top of that, Scoot the low-cost Singapore Airlines wing has cut its fleet size by 98% until July.

Silk Air Flight and Attendants
SilkAir’s fleet capacity is also down to 4%. Photo: SilkAir via Wikimedia Commons

In a press release on 23rd March, Singapore Airlines said the following:

“Singapore Airlines will be cutting 96% of the capacity that had been originally scheduled up to end-April, given the further tightening of border controls around the world over the last week to stem the Covid-19 outbreak. This will result in the grounding of around 138 SIA and SilkAir aircraft, out of a total fleet of 147, amid the greatest challenge that the SIA Group has faced in its existence…It is unclear when the SIA Group can begin to resume normal services, given the uncertainty as to when the stringent border controls will be lifted. The resultant collapse in the demand for air travel has led to a significant decline in SIA’s passenger revenues. The Company is actively taking steps to build up its liquidity, and to reduce capital expenditure and operating costs.” 

It’s the uncertainty around the end of the coronavirus that has cast such a dark shadow over Singapore Airlines’ future and, indeed, the prospects of the entire group.

What effect has the coronavirus had on the SIA Group?

Full financial year results will be released on 14th May. Although the SIA Group has come close to losses like this before, they have never dominated a 12-month period in the same way. In FY2009/10, the SIA Group had suffered due to the global recession and outbreak of H1N1. It lost $213m in the first quarter of the financial year, but that did not affect growth in net profit by the end of the fiscal year.

Singapore Airlines B777
Singapore Airlines has not been affected like this since 2009. Photo: Alex Beltyukov via Wikimedia Commons

Before that, the airline had not made a quarterly loss since 2003, which coincided with the SARS outbreak.

Speaking to The Straits Times, the SIA Group said that its top priority is conserving cash to give it a fighting chance post-pandemic. It said:

“The timing of any recovery from the Covid-19 crisis and its trajectory remain uncertain. During this time, the SIA Group continues to pursue steps to reduce costs and conserve cash, and proactively build liquidity and strengthen our balance sheet.”

Some of the issues that the SIA Group is contending with is purchasing excess fuel compared to the number of flights it has now scheduled. In addition, managers and directors are taking 30% fee reductions, and some 10,000 staff, including pilots, have been affected by furloughs and unpaid leave schemes.

Singapore Airlines A380
Will the SIA Group be able to bounce back in FY2020/21? Photo: Getty Images

Unlike other years where it’s been able to bounce back, what we’ve seen so far with the FY2019/20 indicates very little good news for the SIA Group. Perhaps, despite initial losses, the group will be able to make a come-back in FY2020/21.

Source : Simple Flying More   

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Delta Air Lines Consolidates Services In Major Cities

Delta Air Lines has released a list of ten airports where it will end service and consolidate operations.…

Delta Air Lines Consolidates Services In Major Cities

Delta Air Lines has released a list of ten airports where it will end service and consolidate operations. Starting from May 13th, these airports will see the end of Delta service until at least September of this year.

Delta will re-accommodate passengers affected by the consolidations. Photo: Getty Images

Service consolidations at ten airports

Starting on May 13th, Delta will suspend operations at the following airports through September:

  1. Chicago Midway International Airport (MDW)
  2. Oakland International Airport (OAK)
  3. Hollywood Burbank Airport (BUR)
  4. Long Beach Airport (LGB)
  5. T.F. Green International Airport (PVD)
  6. Westchester County Airport (HPN)
  7. Stewart International Airport (SWF)
  8. Akron-Canton Airport (CAK)
  9. Manchester-Boston Regional Airport (MHT)
  10. Newport News/Williamsburg International Airport (PHF)

Midway flights will be consolidated at the larger Chicago-O’Hare International Airport (ORD) while San Francisco International (SFO) will be the alternate airport of service for Oakland. Hollywood Burbank and Long Beach flights will be consolidated at Los Angeles International (LAX). Passengers normally flying out of T.F. Green in Providence and Manchester-Boston will need to travel to nearby Boston Logan for flights. Meanwhile, Westchester County service will be consolidated at LaGuardia and Stewart service will be consolidated at New York-JFK. Akron-Canton’s alternate service point will be Cleveland Hopkins, and Newport News/Williamsburg flights will be consolidated at Norfolk International (ORF).

Delta Air Lines Salt Lake
Delta Air Lines will consolidate services at some major airports. Photo: Getty Images

Delta will re-accommodate customers that are scheduled to fly out of these airports. Thankfully, most of the alternate service points are not too far from the airports losing service. Although, for some passengers, it may result in a more inconvenient arrival city.

Why is Delta doing this?

Delta is saying that this move is targeted at minimizing the exposure risk of employees where customer traffic is low. SVP of Domestic Airport Operations, Sandy Gordon, offered the following statement:

“The safety of our employees and customers remains our primary focus as we navigate these challenges together. By consolidating operations while customer traffic is low, we can allow more of our people to stay home in accordance with local health guidelines.”

Empty delta plane coronavirus
Flights are already going out empty; this move will help fewer flights go out empty. Photo: Getty Images

While that may be true, it also cannot be overlooked that Delta will be able to cut costs this way. For example, from Long Beach, Delta flies to Salt Lake City and Las Vegas. Delta flies to both of these cities out of Los Angeles.

Instead of running empty flights out of both LGB and LAX, Delta can consolidate services at LAX and put additional passengers onboard its aircraft, thereby reducing costs– especially from jet fuel and additional sanitizing.

Delta 757
From most of these airports, Delta flies to its major hubs. Photo: Getty Images

Delta employees who are affected by this will receive pay protection options from the company through September 30th.

Will Delta further consolidate services?

Delta has filed requests with the U.S. Department of Transportation to consolidate services at other airports in the United States– particularly in smaller cities where load factors are around or below 10%. The DOT is currently reviewing this. Although, some local communities are taking a stand against Delta’s requests citing the economic benefits of Delta’s flights.

At other major airports, Delta will likely continue to consolidate services. Domestically, in the second quarter, Delta has cut 80% of scheduled capacity with another 90% cut internationally.

Are your travels impacted by Delta’s service consolidation? Let us know in the comments!

Source : Simple Flying More   

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