Recently, we had posted about some major airlines barely making it financially, amidst the grave current circumstances. In a report by Al Jazeera, Singapore Airlines suffered a major let down after its shares fell steeply to reach a new low in more than 21 years. The carrier has posted its biggest ever quarterly loss of S$1.12 billion ($815 million). All in all, sales have dropped by 79% and revenue generated per passenger per kilometre sunk by a gargantuan 99.5%. Singapore Airlines’ stock was down by almost half than what it was earlier this year.
Why is Singapore Airlines Affected Even Worse?
Globally, air traffic has plunged because of the pandemic. A reluctance to travel amidst the passengers and tight border controls have led to an almost complete evaporation of air travel. The IATA (International Air Transport Association) as well stated that the ‘industry is unlikely to recover fully before 2024’.
The overall situation is particularly difficult for Singapore Airlines as they do not have any domestic market to cover up, as the international market is barely sustainable. The airline has further speculated that operations might be less than half of pre-pandemic levels till March 2021.
Network and Fleet Review
Singapore Airlines is also reviewing their network – routes and fleet – to help sustain the company in the longer term. On the same lines, the carrier stated:
‘This could lead to a material impairment of about S$1 billion on the carrying values of older generation aircraft, particularly Airbus SE A380s.’
Singapore Airlines operates a moderately sized fleet of 19 Airbus A380 aircraft, which have been in storage since March 2020. While several major carriers have decided to retire the super jumbo, and other inept aircraft from their fleet (Qantas recently retiring their Boeing 747s, Air France retiring their A380s, Lufthansa retiring their six A380s and all A340-600s and Emirates possibly retiring 46 Airbus A380s), we can safely say that the future of Singapore Airlines A380s certainly does not look bright.
The oldest A380 in the airline’s fleet is 12 years old, while the newest one was delivered as recently as 2018. As the carrier expects their network review to be complete by September 2020, the fate of their superjumbos remains hanging in the balance!
Most airlines globally will have to adapt to a lean and sustainable business model such that financial overheads are less, profits are stable, and fleet size and networks are efficient. After posting a historic loss, and with a good chance that Singapore Airlines’ A380s might not fly again, one thing is for sure: this pandemic has changed the face of air travel – not the way we would have liked it to be, but in the way it needs to be.