Lee Kah Whye-
Singapore Airlines’ deal with Tata Sons will inject a further SG$360 million (US$267 million) into Air India.
It will give SIA a 25.1% stake in the enlarged Air India group following its takeover by Tata and merger with Vistara Airlines. The November 2022 deal between Singapore Airlines and Tata Sons to further inject US$267 million into Air India is one of the key strategic initiatives for future growth mentioned in the quarterly financial report. This agreement is subject to regulatory approval.
In a statement, SIA 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 added, “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.”
Last week, Singapore Airlines (SIA) announced that net profit for Q3 which ended in December, came in at SG$628 million (US$465 million) and financial year-to-date profits touched SG$1.55 billion (US$1.15 billion), the highest the airline has ever earned in a quarter as well as for the first nine months of a financial year.
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 comes on the back of Singapore’s announcement that from February 13, it will relax all remaining Covid restrictions for travellers as well as locals.
Travellers who are not fully vaccinated against Covid will no longer need to show proof of a negative pre-departure test before entering Singapore and do not need to buy travel insurance to cover Covid treatment if they fall ill on the island.
Those who are vaccinated no longer need to show proof on arrival. The use of a face mask on public transport which was the last remaining local Covid-era protocol is no longer mandatory as of the same date.
Singapore was one of the first Asian countries to reopen after the Covid pandemic and that has aided its tourism industry along with its national carrier.
Besides, government grants to affected industries during Covid, the airline was the beneficiary of its shareholders and financial institutions’ confidence in its business as it managed to raise SG$22.4 billion (US$16.6 billion) during Covid including SG$15 billion from shareholders (largest of which is state investment firm Temasek Holdings) through sales of shares and convertible bonds. As of December 2022, it still holds a cash balance of SG$15.4 billion.
This allowed it to keep most of its staff and fleet and facilitated restoration of routes quickly once travel resumed. This was unlike other regional airlines which had to let staff go and sell aircraft to keep afloat.
SIA reported that its group passenger capacity reached 80 per cent of pre-Covid levels in December 2022, higher than the average of 51% for the Asia-Pacific region. Its two main airline brands carried 7.4 million passengers in the third quarter, up 17% from the second quarter.
When added to the first two quarters, the SIA Group served 18.8 million passengers for the first nine months of the financial year. This is a nine-fold increase from a year earlier (2021) when most of the world’s borders were still closed.
Passenger load factors for the Group improved by 0.8 percentage points to 87.4%, the highest for any quarter, on the back of record load factors for both premium airline, SIA (87.3%) and low-cost carrier, Scoot (87.8%).
SIA reported that its cargo performance moderated compared to the previous quarter due to softening demand, as well as an increase in belly hold capacity as more passenger aircraft returned to service globally.
While yields were weaker quarter-on-quarter, they remained elevated — almost double — compared to pre-Covid levels.
Overall, SIA’s revenue for the three months to December rose SG$358 million (US$265 million), an 8% quarter-on-quarter increase to SG$4.846 billion (US$3.589 billion), a record.
Passenger-flown revenue increased by 14% or SG$463 million to SG$3.767 billion as traffic grew 12.2 per cent for the quarter, outpacing the 11.1 per cent expansion in capacity. Revenue per available seat-kilometre (RASK) was 10.6 Singapore cents, the highest quarterly RASK in the group’s history.
Singapore Airlines to get 25.1% stake in enlarged Air India group
