Following consecutive quarters of standout financial results, many expected Singapore Airlines (SIA) to turn in a dazzling set of numbers last week when it announced its full-year results. Singapore’s national carrier did not disappoint as it reported the highest annual profit in its 76-year history.
For the financial year ending March 2023, the SIA Group posted a record net profit of SGD 2,157 million (USD 1,598 million) for the year, versus an SGD 962 million (USD713 million) net loss in the previous year, an earnings gain of SGD 3,119 million (USD 2,310 million). SIA’s revenue rose 133.4 per cent or by SGD 10,160 million (USD 7,526 million) year-on-year to a record SGD 17,775 million (USD 13,167 million). Although capacity was ramped up by 94 per cent, it was outpaced by traffic which rose 449.9 per cent.
This led passenger flown revenue to expand by SGD 10,560 million (or 376.3 per cent) to SGD 13,366 million. Revenue per available seat-kilometre (RASK) was 10 Singapore cents, the highest yearly RASK in the carrier’s history.
During the financial year under review, the two airlines in the SIA group, full-service Singapore Airlines and low-cost Scoot, together served a total of 26.5 million passengers, a six-fold increase from a year ago.
With capacity at only 79 per cent of pre-COVID levels as of March 2023, there is still room for the airline to do better. It said that its capacity is projected to reach an average of around 83 per cent of pre-COVID levels in the first half of the current financial year.
The outstanding results is mostly because of the way SIA responded to the crisis wrought by the COVID-19 pandemic on the airline industry.
As borders closed, and airlines stopped flying, SIA with the support of shareholders and its lenders managed to raise over USD16 billion of cash to shore up its balance sheet. This enabled it to retain more than 80 per cent of its staff as well as keep most of its aircraft operational. Many regional competitors had to furlough or let staff go and sell aircraft and as a result, had a slower start once borders reopened again.
During COVID, SIA redeployed cabin crew to other sectors including as “care ambassadors” in healthcare facilities and as “transport ambassadors” to help manage safe practices on public transport.
The carrier also took the opportunity to upgrade some of its cabins and also merged regional carrier Silkair with its main full-carrier Singapore Airlines to save costs. Digital services were also upgraded and a lifestyle rewards app Kris+ was launched.
As borders reported, SIA rapidly deployed services to meet the pent-up travel demand charging above-average fares as regional competitors played catch-up.
To prepare for the future, SIA is looking into several strategic initiatives including the continued expansion of its network through deeper collaboration with like-minded airlines. One of these initiatives is the proposed merger of Air India and Vistara to strengthen SIA’s presence in the fast-growing Indian aviation market.
Through its ownership of Vistara and a further injection of USD 250 million in November last year, Singapore Airlines will be a 25.1 per cent owner of Air India once the merger is approved by the Indian authorities.
When Tata Sons appointed Singapore Airlines (SIA) veteran Campbell Wilson as chief executive officer in the middle of last year, it was probably with a view to trying to mirror the success of SIA at the newly acquired Air India.
Wilson, a New Zealander, spent 25 years at SIA rotating through various roles including chief executive of Scoot, senior vice president of sales and marketing and worked for the airline in countries like Japan, Canada, and Hong Kong.
The new owners have committed USD 70 billion to aircraft, USD 200 million to IT, and USD 400 million to refit the existing fleet. In February this year, it made the largest single order for new aircraft worldwide by buying 470 planes from both Boeing and Airbus.
To support the growth, the airline has recruited thousands of staff, including 10 times the number of cabin crew and 10 times the number of pilots that would have been typically recruited each year.
Following years of under-investment, and lack of recruitment and training, it has already made good progress in less than a year according to Wilson.
“The biggest challenge for us at the moment is simply the scale and pace of growth. It is a sizable airline. We carry over 100,000 people a day already,” he added.
Although the impact of the changes will only be felt over time, Air India’s CEO is confident that the changes he has implemented will bear fruit and lead the airline back to being a premium global carrier eventually.
CEO Wilson said, “Air India was in the 1960s, one of the best airlines in the world. It’s got a long 90-year history. The past few years have been a bit challenging with under-investment. But now under the Tata group, which took ownership in January of 2022, there is a very significant effort to get Air India back to the heights it once was.”