More Singapore Airlines (SIA) planes are getting off the ground as countries start to emerge from their lockdowns, although the Covid-19 pandemic continues to batter the global air travel sector.
From a total of 138 SIA and SilkAir planes that were grounded in late March, the number sitting idle is now down to 94, the airline told The Sunday Times.
SIA and its regional arm have a total of 145 planes, with two aircraft leaving the fleet since end-March.
The group’s low-cost arm, Scoot, is also operating more flights now, although 32 out of its 45 planes remain grounded.
Seizing the opportunity presented by the growing demand for cargo flights in particular, the SIA group is now using some passenger planes to carry cargo.
However, the pace at which border restrictions will be eased to allow for even more flights is beyond SIA’s control, said chief executive Goh Choon Phong.
And as passenger flights slowly resume – without the need for travellers to be quarantined on arrival – SIA knows it is unlikely to be among the first few carriers to benefit, he told The Sunday Times.
This is because recovery is expected in the domestic air travel market first, given that such flights do not require approval from foreign governments and regulators.
The key, then, is to be nimble and flexible so that when strong recovery comes in the international market, SIA can be first in line to take off, Mr Goh said.
“Opening up of borders between countries is a prerequisite for our recovery, and that is something that we are not in a position to influence,” he said.
But SIA must be ready to respond and move quickly when the time comes, Mr Goh stressed.
IMPORTANCE OF SPENDING WISELY
For the near term, SIA’s lack of hinterland and reliance on the premium market will be a painful disadvantage. Its recovery is dependent on how quickly Singapore rebounds, so the billions will have to be used wisely, especially to cover heavy losses in the current financial year and, quite possibly, beyond.
AVIATION ANALYST SHUKOR YUSOF, of Endau Analytics.
Last Wednesday, Singapore announced that essential business travel will be allowed between Singapore and China for approved travellers who meet stipulated requirements, including compulsory Covid-19 testing.
Applications are open from tomorrow.
It is the first such agreement for the Republic, and similar discussions are on with other countries, including New Zealand, Australia, South Korea and Japan.
All are key markets for SIA, industry watchers noted, adding that while the resumption of flights to these countries will benefit the airline, it will take time for flights to return to normal volumes.
Mr Alexandre de Juniac, director-general and chief executive of the International Air Transport Association (Iata), recently said: “Flight numbers are increasing. Countries are beginning to lift mobility restrictions. And business confidence is showing improvement in key markets such as China, Germany and the US.”
He added: “The initial green shoots will take time – possibly years – to mature.”
Until then, SIA is making sure its balance sheet remains strong, said Mr Goh.
A recent rights issue of shares and mandatory convertible bonds by SIA has raised gross proceeds of $8.8 billion “which should be able to last us for much of the current financial year”, he said.
“At this point of time, it’s all about cash burn for airlines, given that revenues are virtually nothing… You need a strong balance sheet just to survive,” stressed the chief executive, who has been helming the carrier since January 2011.
The recent fund injection puts the airline in a position of strength when it negotiates with suppliers and partners to defer payments, for example, Mr Goh said.
“Your partners and suppliers must have confidence in your ability to survive this… and in your ability to therefore be a longer-term partner and customer,” he added.
Still, it will be a long, tough journey ahead for SIA, said aviation analyst Shukor Yusof of Endau Analytics.
“While the billions it has raised ensure SIA is now the best capitalised airline in the world, it doesn’t guarantee success, at least not the kind SIA is used to.
“For the near term, SIA’s lack of hinterland and reliance on the premium market will be a painful disadvantage. Its recovery is dependent on how quickly Singapore rebounds, so the billions will have to be used wisely, especially to cover heavy losses in the current financial year and, quite possibly, beyond,” he said.