Singapore Airlines to purchase 25.1 pc stake in enlarged Air India group


The agreement between Singapore Airlines and Tata Sons (Tata) will give Air India an additional SGD 360 million (USD 267 million). After Air India is acquired by Tata and merges with Vistara Airlines, it will give SIA a 25.1% interest in the larger Air India group.

One of the important strategic objectives for future expansion stated in the quarterly financial report is the November 2022 agreement between Singapore Airlines and Tata Sons to further contribute USD 267 million into Air India. Regulations must yet approve this agreement.

SIA in the statement said, "The merged entity will be four to five times larger in scale compared to Vistara, with a strong presence in all key airline segments in India. The proposed merger will bolster SIA's presence in India, strengthen its multi-hub strategy, and allow it to continue participating directly in this large and fast-growing aviation market."

The airline further said, "Deeper collaboration with like-minded airlines is an integral part of the SIA Group's partnerships strategy. This enables SIA and its partners to drive more traffic to their hubs, offer more options to customers, and increase the Group's global footprint."

Singapore Airlines (SIA) revealed this week that its net profit for the third quarter, which ended in December, was SGD 628 million (USD 465 million), and that its total revenue for the year had reached SGD 1,555 million (USD 1,152 million). The airline has never made more money in a quarter or the first nine months of a fiscal year combined.

The airlines said in a statement that this is due to "the robust demand for air travel continuing into the third quarter of FY2022/23, building on the momentum that began after Singapore relaxed its border restrictions in April 2022." SIA financial year starts in April.

This follows Singapore's statement that, starting on February 13, it will remove all remaining Covid restrictions for both residents and visitors. Travelers who have not received the full course of Covid vaccination will no longer need to purchase travel insurance to cover Covid treatment if they become unwell while on the island or provide documentation of a negative pre-departure test in order to enter Singapore. Individuals who are immunised are no longer required to present documentation upon arrival. The final surviving local Covid-era protocol, wearing a face mask while using public transportation, is no longer required as of the same day.

One of the first Asian nations to reopen after the Covid pandemic was Singapore, and this has helped the nation's airline and tourism industries. The airline managed to raise SGD 22.4 billion (USD 16.6 billion) during Covid, including SGD 15 billion from shareholders—the largest of which is state investment firm Temasek Holdings—through sales of shares and convertible bonds. In addition to government grants to affected industries during Covid, the airline was also the beneficiary of investors' and financial institutions' confidence in its operations. It still had a cash balance of SGD 15.4 billion as of December 2022.

As a result, it was able to retain the majority of its workforce and fleet and quickly restore its routes after traffic was resumed. In contrast, several regional airlines had to lay off employees and sell off their fleets in order to remain in business. According to SIA, its group passenger capacity surpassed pre-Covid levels by 80% in December 2022, above the region's average of 51%.

7.4 million passengers were carried by its two primary airline brands in the third quarter, an increase of 17% from the previous quarter. The SIA Group carried 18.8 million passengers through the first nine months of the fiscal year when the first two quarters are combined together. Compared to a year prior in 2021, when most of the world's borders were still closed, this is a nine-fold increase.

Due to record load factors for both premium airline SIA (87.3%) and low-cost carrier Scoot, the Group's passenger load factors increased by 0.8 percentage points to 87.4 percent, the highest for any quarter (87.8 per cent).

While additional passenger aircraft across the world returned to service, SIA noted that its cargo performance declined compared to the prior quarter due to decreasing demand as well as an increase in belly hold capacity. Even if yields went down from quarter to quarter, they were still high — nearly twice as high as they were before Covid.

The total income for SIA increased by SGD 358 million (USD 265 million), or 8%, quarter over quarter, to reach a record-high SGD 4,846 million (USD 3,589 million).

Revenue from passengers carried climbed by 14%, or SGD 463 million, to SGD 3,767 million as traffic surged by 12.2% during the quarter, surpassing capacity growth by 11.1%. The highest quarterly RASK in the Group's history was 10.6 Singapore cents, or revenue per available seat kilometre (RASK).

The amount of cargo flown income decreased by 14.1%, or SGD 141 million (USD 104 million), to SGD 862 million (USD 638 million). Lower yields, which were down 14.6%, were somewhat offset by a minor increase in loads, up 0.6%.

Spending climbed 7.4% quarter over quarter, or SGD 281 million (USD 208 million), to SGD 4,091 million (USD 3,030 million). This included an increase in non-fuel spending of SGD 371 million (15.5%), which was somewhat offset by a drop in net fuel costs of SGD 90 million (-6.3%).

Because of higher foreign exchange losses of SGD 194 million (USD 144 million) reported at the end of the current quarter as the US dollar weakened 6.1% versus the Singapore dollar, the increase in non-fuel cost was more than the increase in capacity. The main reason why net fuel costs decreased to SGD 1,333 million (USD 987 million) was a 13% decrease in fuel prices. Higher volumes uplifted (+USD 103 million) and a smaller fuel hedging gain (+USD 19 million) partially offset this. 

Current Issue