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Singapore Airlines returns to profit as Asia travel surges
Carrier warns of inflation, as it and city-state prepare for more visitors


Singapore Airlines will restore its India operations to pre-pandemic levels, while adding more flights to Japanese cities such as Tokyo and Osaka. © Reuters
TSUBASA SURUGA, Nikkei staff writerJuly 28, 2022 20:41 JST

SINGAPORE -- Singapore Airlines returned to profit for the three months ended June, helped by a sharp revival in travel demand after regional economies reopen their borders as COVID comes under control.

The city-state's flagship carrier on Thursday reported a net profit of 370 million Singaporean dollars ($268 million) for the April-June period, recovering from a S$409 million loss it posted the same period a year ago. Sales tripled to S$3.91 billion in the quarter from a year ago.

The airline has had a choppy year. It made its first quarterly profit in the three months to end-December since the onset of the pandemic, which reflected the city-state's move to expand quarantine-free travel in October. But it fell back into a loss over the next three months, hit by higher fuel prices.

"Travel demand is expected to remain robust in the near term as we head into the year-end holiday travel period, with forward sales staying buoyant for the next three months up to October 2022," the airlines said in a statement.

Although the travel industry in Southeast Asia is recovering, inflationary pressure, particularly high fuel prices, could still dampen earnings as airlines ramp up capacity.

As a key travel hub, Singapore was hit hard by global COVID restrictions. For the fiscal year ended March, Singapore Airlines posted a net loss of S$962 million, its third consecutive annual loss.

Since April this year, however, Singapore has relaxed most of its restrictions and allowed quarantine-free entry for vaccinated travelers.

In the first half of this year, Singapore saw 1.5 million visitors, nearly 12 times more than the same period last year. The arrivals mostly came from Indonesia, India and Malaysia. As global travel picks up, the Singapore Tourism Board expects 4 million to 6 million visitors this year. This is still far from the 19.12 million arrivals in 2019, but much higher than the 2.74 million in 2020.

During the first quarter, Singapore Airlines carried over 5 million passengers, 14 times higher than the year before.

Elsewhere in the region, Thailand has also opened up to vaccinated travelers and it expects 9.3 million visitors this year. Indonesia, Vietnam and Malaysia also hope to take in more arrivals this year, now that they, too, have lifted restrictions.

To meet increasing demand, Singapore's Changi Airport said it will reopen in September its fourth terminal, which mostly handles low-cost flights.

Still, the tourism board noted that the travel industry "will face some headwinds for the rest of the year because of the volatile global political and economic environment, as well as the evolving health situation."

For Singapore Airlines, "inflationary pressures including elevated fuel prices remain a concern." Its net fuel cost more than tripled to S$1.27 billion in the three months to end-June. The airline said that it will continue to "keep a tight rein on costs," while increasing services to destinations globally.

Singapore Airlines will restore its India operations to pre-pandemic levels, while adding more flights to Japanese cities such as Tokyo and Osaka. With strong demand, more services will be added to Los Angeles and Paris, the airline said.

Shares in Singapore Airlines rose 0.2% to S$5.36 on Thursday ahead of the earnings announcement.