SINGAPORE (May 8): Singapore Airlines (SIA) has announced on Friday that it expects to report a “material operating loss” for 4QFY19/20, and the full year for FY19/20 when it releases its unaudited financial results on May 14.
The airline attributes world-wide travel restrictions owing to the Covid-19 pandemic, as well as weak fuel prices in March 2020. The latter has led to the group being in an “over-hedged” position with respect to expected fuel consumption in FY2020/2021.
The group says it expects to report a small operating profit, but a net loss for FY19/20 due to the strong performance for the first nine months of the FY. It also expects operating cash flows to be in the red during the ongoing quarter ending June owing to the uncertainties of the pandemic.
SIA, together with its subsidiary SilkAir, have extended their combined capacity cuts of around 96% until the end of June 2020, while Scoot is expecting capacity cuts of approximately 98%.
According to SIA’s statement, it is “in negotiations with aircraft manufacturers to adjust our delivery stream for existing aircraft orders, in view of prevailing market conditions, balancing that with our longer-term fleet renewal programme”.
The airline is also in talks with various suppliers to reschedule payments.
“To build our liquidity and strengthen our balance sheet, we are undertaking the rights issue as announced on 26 March 2020,” it said.
See also: Singapore Airlines to raise $15 bil via rights issue of new shares, mandatory convertible bonds
As at 10.34am, shares in SIA are trading at 10 cents higher, or 2.3% up, at $4.50.