The Covid-19 pandemic continued to have a severe impact on SIA
Group’s operations, with passenger traffic (measured in revenue passenger-kilometres)
falling by 98.9% amid tight global border controls and travel restrictions.
Group revenue declined $6,691 million (-80.4%) year-on-year to $1,634
million in the first half of the financial year. Passenger flown revenue fell sharply as
Singapore Airlines, SilkAir and Scoot were severely impacted by restrictions on
international travel. This was partially offset by stronger cargo flown revenue (up $274
million, or +28.3%) as countries sought to restore global supply chains. SIA responded to
the demand by maximising freighter utilisation and deploying passenger aircraft on cargo
Group expenditure decreased $4,415 million (-55.8%) year-on-year to
$3,497 million, attributable largely to lower non-fuel expenditure and net fuel cost. Non-
fuel expenditure was down 54.0% (-$3,005 million) year-on-year, following wide-ranging
cost-saving initiatives, including capacity cuts, contract renegotiations, and staff-related
measures, further aided by various government support schemes. As a result of capacity
cuts and lower fuel prices, fuel cost before hedging fell $2,207 million (-91.0%) year-on-
year. However, this was partially offset by fuel hedging losses during the first half,
compared to a gain last year. As a result, fuel cost post hedging was $1,973 million lower
Mark-to-market losses of $563 million on ineffective fuel hedges were
recognised in the first half, following a downward adjustment to the expected rate of
capacity recovery, and consequently lower expected fuel consumption. The Group has
paused fuel hedging activity since March 2020, given the uncertain pace of recovery.
As a result, the Group swung to an operating loss of $1,863 million for the
first half, a $2,276 million reversal from an operating profit of $413 million last year.
For the first half ended 30 September 2020, the Group reported a net loss of
$3,467 million, a drop of $3,673 million against last year, driven primarily by the
deterioration in operating performance, as well as the following non-cash items:
An impairment of $1,333 million on the carrying values of older generation aircraft, with
26 aircraft deemed surplus to fleet requirements after completion of a review of the
longer-term network, both indicated in the Business Update issued in July 2020. These
comprise seven A380s, four 777-200/200ERs, four 777-300s, nine A320s and two
A $127 million charge from the liquidation of NokScoot, as previously reported in the
Business Update issued in July, comprising mainly the impairment of seven Boeing
777 aircraft leased to NokScoot and the Group’s share of related costs.
Having reviewed the impact of Covid-19 on business conditions, the Board also
considers it prudent to fully write down the goodwill of $170 million that was recorded
when SIA first gained control of Tiger Airways in October 2014.
The Group had announced the reduction of about 4,300 positions across the
three airlines. Steps were taken to reduce the number of staff that would be impacted by
involuntary release, including salary cuts, a recruitment freeze, open vacancies that were
not filled, an early retirement scheme and a voluntary release scheme for staff. These
measures reduced the number of staff impacted by the manpower rationalisation exercise
to around 2,000. The Group incurred a cost of $42 million in the exercise.