The Q2 losses came on the back of an impairment charge for older aircraft as well as $42 million in retrenchment costs.
The national carrier reported a loss of $1.1 billion for the first quarter to June. With H1 loss coming in at $3.47 billion, it means that it bled about $2.3 billion – twice the loss in Q1 – in the second quarter.
The H1 net loss was a reversal from a $206 million profit for April to September last year, before it was blindsided by the coronavirus pandemic.
Revenue was 80.4 per cent down at $1.63 billion for the first half of FY2021, compared with $8.3 billion in the preceding year.
The hit from the pandemic has not only resulted in a steep decline in revenue, but also led the group to book an impairment of $1.33 billion on the carrying values of older-generation aircraft, said the carrier in a statement yesterday released after trading hours.
Besides the impairment on aircraft, SIA has fully written down the goodwill of $170 million that was recorded when it took control of Tiger Airways in October 2014.
Furthermore, the retrenchment exercise which cut 2,000 jobs had cost the group $42 million, SIA disclosed for the first time since its announcement in September on the axe falling.
Yesterday, it said it has skipped an interim dividend “in view of the significant loss incurred and the need to conserve cash”.
SIA said industry airfreight capacity is anticipated to remain constrained because of lower bellyhold capacity arising from fewer passenger flights.
This is expected to keep cargo yields and load factors high in the coming months.
It expects to see a progressive recovery in general cargo demand, and continued strong demand from pharmaceuticals and perishables. Cargo demand is also expected to get a boost from the big e-commerce sales days and new product launches, SIA said.
Hence, it will continue to grow the group’s capacity to meet demand and expand the cargo network by deploying passenger aircraft on dedicated cargo operations.
Meanwhile, the group’s Discover Your Singapore Airlines suite of experiences – which include in-flight dining in a stationary A380 plane – have seen an overwhelming response from local residents.
“We know that many people have signed up simply to show their support for Singapore Airlines. For that, we are very grateful, and will never take it for granted,” the carrier said.
SIA noted that recovery is likely to remain patchy, given the new waves of infections around the world.
“Nonetheless, there are some early signs of optimism. Customers are slowly becoming more confident about air travel, given the robust health and safety measures that have been put in place by airlines, airports and governments.”
SIA shares closed one Singapore cent higher at $3.48 yesterday, before the financial results were released.