China Southern Airlines has started its retirement of its five Airbus A380s.
Quietly B-6136 and B-6137 have been flown to Victorville, CA for storage and disposal.
The other three aircraft should be removed from service by the end of 2022.
China Southern was the lone A380 operator in China.
Top Copyright Photo: China Southern Airlines Airbus A380-841 B-6140 (msn 120) AMS (Ton Jochems). Image: 956910.
China Southern Airlines aircraft slide show:
China Southern Airlines aircraft photo gallery:
QANTAS Group issued this financial statement:
The impact of Delta lockdowns and emergence of the Omicron strain drove the Qantas Group to its fourth consecutive half yearly statutory loss of the pandemic, but with some tailwinds accelerating balance sheet repair.
The Groupโs flying operations were severely impacted by widespread domestic lockdowns and continued international restrictions, reducing the Groupโs total flying to 18 per cent of pre-COVID levels during the half.
As a result of these severely depressed market conditions and ramp-up costs, the Group recorded an Underlying EBITDA loss of $245 million for the first half of FY22. Underlying EBIT loss was $1.13 billion, reflecting non-cash depreciation and amortisation. Revenue losses since the start of the pandemic grew to more than $22 billion.
However, cash generated from the sale of under-utilized land at Mascot; a rush of flight bookings as the Delta lockdowns ended; international border closures easing in the second quarter; and strong contributions from Qantas Freight and Qantas Loyalty made significant inroads to balance sheet repair. Net debt finished the half at $5.5 billion, putting it within the Groupโs target range.
In a sign of the post-Delta recovery, the Group recorded three consecutive months of positive net free cash flow between October and December (excluding the land sale), largely as a result of the recovery in forward bookings.
The quick ramp-up of key international services, plus the addition of new routes across Jetstar and Qantas, was key to seizing early momentum in travel demand as restrictions eased.
Liquidity remained strong with $4.3 billion in cash and undrawn facilities as at 31 December.
Concern regarding the Omicron strain had a dampening impact on travel demand in December that intensified in January and was compounded by the unexpected delay to Western Australiaโs border opening. However, forward demand for both international and domestic services has improved during February โ helped by Australiaโs full reopening to all visa holders and the announcement of a new date for WAโs borders to open. This positive momentum is expected to continue in coming months.
The slow recovery in travel demand exacerbated stranded labour costs associated with the decision to stand up all Australian-based employees in December. This resulted in a temporary surplus of around 17 per cent of the Groupโs workforce in quarter three.
GROUP DOMESTIC
Delta-related lockdowns meant that domestic travel demand was heavily subdued for most of the first half, with the Group only flying 42 per cent of its pre-COVID capacity. While there was a positive demand spike in November and December, the traditional summer peak was below expectations due to Omicron-related uncertainty.
Group Domestic operations recorded an Underlying EBITDA loss of $388 million.
With the 15 new routes launched in the six months to December 31, Qantas and Jetstar have now announced 48 new domestic routes in the past 18 months as Australians look for new opportunities to travel.
Careful management of capacity meant that 92 per cent of the Groupโs domestic flying in the half was
cash positive.
Almost half of the $840 million in structural recovery benefits delivered so far have been in Qantas Domestic, with a final target of approximately $500 million per annum in savings by the end of FY23 โ resulting in a significantly lower cost base compared with pre-COVID that will assist with recovery in a competitive market.
Within the period, the Group announced the Airbus A320neo and A220 families as the preferred aircraft forย Project Winton, its domestic fleet renewal program. The decision is still subject to final Board approval and discussions with work groups on the arrangements required to operate the aircraft, with an order anticipated by the end of FY22.
GROUP INTERNATIONAL AND FREIGHT
A record performance by Freight offset cash losses from Qantas International as it emerged from hibernation, with the whole division achieving positive Underlying EBITDA of $89 million. Depreciation and amortization took this to an Underlying EBIT loss of $238 million.
The standout result by Qantas Freight highlights the natural hedge it has provided during the pandemic due to a lack of cargo capacity on passenger aircraft.
While some of this demand will ease beyond FY22 as international passenger flights increase, there has been a permanent shift in e-commerce patterns and freight operations are expected to remain higher than pre-COVID levels. In response, Qantas announced theย conversionย of two A330 passenger aircraft into freighters to support this market shift as well as taking delivery of its third A321 freighter.
Qantas was able to ramp-up quickly to take advantage of accelerated international border openings in November, with high levels of pent-up demand captured on new services to Delhi and the return of services to London, Los Angeles and Singapore.
Despite these bright spots, international flying remained significantly impacted by the continued closure of Australiaโs international border to tourists throughout the half, and the reintroduction of border restrictions by other countries as they managed Omicron.
Qantas International has achieved approximately $325 million in recurring structural cost benefits and is on track to increase this to greater than $400 million by FY23, which will significantly assist in recovery.
Jetstar had limited opportunities to fly internationally due to continued border restrictions across its key markets in South East Asia. Jetstar Japan narrowed its losses as domestic flying in that market started to recover.
QANTAS LOYALTY
Qantas Loyalty remains a strong performer with continued earnings growth in the first half of FY22 delivering a strong cash contribution and an Underlying EBIT of $127 million.
The number of Frequent Flyer members continued to grow (up 150,000 to 13.8 million) as did the number of points earned on the ground. All five major financial services partners have been re-signed as well as key supermarket partner, Woolworths. New and expanded deals were signed with Optus, Accor and bp, creating more opportunities for members to earn and redeem points.
In a continued expansion into financial services,ย Qantas Business Moneyย will launch in 4Q22, enabling small to medium enterprises to transact in foreign currencies at highly competitive rates and earn points in the process, in a partnership with Airwallex.
A combination of border openings and increase in seats available to Frequent Flyer members by up to 50 per cent saw some record levels of redemption. The program also maintained record levels of member satisfaction in the half.
Qantas Loyalty announced a newย Green Frequent Flyer tier, aimed at rewarding members for making eco-friendly decisions on the ground as well as in the air.
SUSTAINABILITY UPDATE
Sustainability is a key priority for the Group as it emerges from the pandemic. Significant work took place in the half on the pathway to reach net zero emissions by 2050. In a first for any Australian airline, Qantas purchased up to 30 million litres of Sustainable Aviation Fuel (SAF) over three years for flights departing Heathrow, London.
In March, the Group will announce more detail on its sustainability strategy, including an emissions reduction target for 2030.
LOOKING AFTER CUSTOMERS
Uncertainty around border restrictions and testing requirements has been a significant challenge for customers as travel resumes. Recent initiatives to help include:
REWARDING EMPLOYEES
As the Qantas Group recovers from the pandemic, itโs important that employees who help deliver that recovery share in the success.
Our people have faced unprecedented challenge and uncertainty over the past two years, enduring long periods of stand downs as well as wage freezes as the Group battled to remain viable and moved to repair the damage done by COVID.
The Board today confirmed that a Recovery and Retention Plan โ which was first flagged in September 2021 โ will reward around 20,000 eligible non-executive employees with rights to 1,000 Qantas shares.
At the current share price, the rights for each eligible employee are valued at more than $5,000. As the Group recovers, these rights allow us to reward our employees in line with shareholders.
The rights are subject to conditions including the Group delivering on the key targets of its COVID recovery plan and the employee remaining with the company. If conditions are met, the rights will convert to shares in August 2023. These will be new shares issued by Qantas to employees.
No annual executive bonuses will be paid in FY22 for the third year in a row and in addition to a two year wage freeze. However, managers and senior executives will be eligible for a share rights-based Recovery and Retention bonus in August 2023 based on the same performance and service conditions as non-executive employees. Formal invitations to participate in this plan will be issued in coming months and will be accompanied by relevant ASX disclosures.
CEO COMMENTS
Qantas Group CEO Alan Joyce said: โMost of Australia was in lockdown for several months of the first half, so the loss weโve announced today isnโt surprising but it is frustrating.
โWe saw a sharp rebound in travel demand when borders started opening in November and December, only to be hit by the Omicron wave and all the uncertainty that came with it.
โThe uncertainty carried over into January but demand has started to recover as Australia adjusts to truly living with COVID. Our frequent flyer surveys show the intent to travel is extremely high and weโre seeing good leisure demand into the fourth quarter. Weโve also seen a sharp uptick in international ticket sales in the past few weeks.
โPredictions in a pandemic are naturally fraught, so we always forecast according to the best information we have but with the agility to adjust as needed. The fact we have all our Australian-based employees back at work means it makes sense for us to fly where itโs cash positive to do so.
โDespite all the uncertainty, we finished the first half with net debt back inside our target range and with strong liquidity, meaning we can start to look further ahead at strategic decisions on fleet, network and growth opportunities.
โWeโre on track to deliver more than $900 million in annualised savings through restructuring by the end of FY22, which is ahead of schedule and means weโre able to recover faster and perform better than a pre-COVID Qantas Group could have.
โThe challenge of COVID hasnโt obscured the challenge of sustainability and emissions. Since January, weโve been adding sustainable aviation fuel into our flights from London and weโre on the cusp of doing the same out of the US. Weโll have a significant update on our plans for emissions reduction next month.
โWeโre very conscious of the support and patience shown by customers and shareholders as we all wait for travel conditions to stabilise. In the meantime, weโve done a lot of work to put this company in the best possible position to deliver.
โEmployees across the Qantas Group have lived through enormous challenge and uncertainty over the past two years. Many have been stood down for extended periods of time and weโve asked them to accept a wage freeze to help our company get through an unprecedented crisis that many other airlines didnโt survive.
โIโm pleased that weโre able to offer our people a direct stake in the national carrier through a reward and retention program. It means those who help us through the recovery can share in the success, just as they have in the past.โ
OUTLOOK
While travel demand is strengthening and there have been positive developments on international borders in recent weeks, Omicron is likely to negatively impact Group EBIT by an estimated $650 million in 2H22.
Key assumptions for FY22 are:
Delta Air Lines has suspended its codeshare agreement with Aeroflot. Aeroflot and other other Russian businesses are being isolated due to Russia’s unprovoked invasion of Ukraine.
โWe have removed our code from Aeroflot-operated services beyond Moscowโs Sheremetyevo Airport and removed Aeroflotโs code from Delta-operated services from Los Angeles and New York-JFK,โ
Bangkok Airways has announced the resumption of its direct services between Bangkok (Suvarnabhumi) and Krabi, starting on March 27, 2022.
The resumed services between Bangkok (Suvarnabhumi) and Krabi will be operated 1 flight daily with an Airbus A319 aircraft. The outbound flight, PG261 departs Bangkok (Suvarnabhumi) at 08.15hrs. and arrives Krabi airport at 09.40hrs. The inbound flight, PG262 departs Krabi airport at 10.40hrs. and arrivesย Bangkok (Suvarnabhumi) at 12.10hrs.
On the financial side, the airline reported its 2021 total revenue was down 44.5% to $174.0 million (US) and its net loss grew 61.4% to $264.1 million.
From OAG:
The Impact on Aeroflot
Marginally Longer Flying Times
โFor airlines operating to and from North East Asia where Russian airspace has been heavily used, finding alternate routings will be slightly harder, but not impossible given the range of new aircraft types. Some may head further north with a polar routing, whilst some may head south, but either way once again the inconvenience may be offset by reduced en-route chargesโ
ย ย ย ย ย ย Potential Positive Outcomes
Read the full article:
Kargo Xpress has announced the commencement of flight operations to Hong Kong on February 21, 2022.
Operating a Boeing 737-800BCF freighter with cargo capacity of 20,000kg, the inaugural flight WW888 departed at 9.00PM from Kuala Lumpur International Airport (KUL) for Hong Kong International Airport (HKG). The return flight WW889 from HKG arrived at KUL at 6.30AM, 22 February 2022. This marks a new milestone in Kargo Xpress network.
With the inaugural flight, Kargo Xpress will be operating daily flights from KUL to HKG. Kargo Xpress plans to add a second daily frequency flights from KUL to HKG via Kota Kinabalu International Airport (BKI).
In addition to HKG, KCH and BKI, Kargo Xpress operate 9 frequencies weekly to Macau (MFM). Kargo Xpress starting from February 15, 2022 commenced daily schedule flights to Kuching (KCH) and BKI.
Currently Kargo Xpress has a fleet of 3 full freighter aircrafts comprising a Boeing 737-400F and 2 B737-800BCFs. All aircrafts operate from its hub in Kuala Lumpur International Airport(KUL). The Boeing 737-400F has 10 standard pallet positions whilst the B737-800BCF has 12 pallet positions on its main cargo deck.
Lynne Embleton, CEO, Aer Lingus, Results Commentary
Our FY 2021 performance reflects the fact that Ireland continued to impose the most stringent and longest lasting travel restrictions in Europe, and those restrictions impacted Aer Lingus more acutely than other airlines.ย We announced a pre-exceptional operating loss of โฌ347m for the year. This is on top of the โฌ361m lost in 2020.
Additionally, it reflects the impact that US restrictions had on our key transatlantic business.ย For almost two years, the national narrative in Ireland was intensely anti-travel, compounded by the enforcement of mandatory hotel quarantine. As a result, passenger numbers in 2021 were less than 25 per cent of 2019 levels.ย ย The reaction to the Omicron variant in terms of reintroducing restrictions at the end of 2021 also dampened the nascent recovery and was a further setback for Aer Lingus.
The scale of these pandemic impacts was such that throughout 2020 and 2021, Aer Lingus losses were almost โฌ1m per day and the company had to take on significant debt. The demand environment is now much more positive and Aer Lingus can look forward with optimism to more normal levels of flying over the course of 2022. However, the financial damage caused to the company over the last two years will take time to repair, in particular dealing with the debt which the company has accumulated. We also need to invest in adding new aircraft to our fleet. For these reasons the company will have to carefully manage its cost base and ensure that it is efficient and competitive going forward.
Throughout the pandemic Aer Lingus sought to retain the relationship with as many of its people as possible. Government supports such as the Employee Wage Subsidy Scheme (EWSS) helped, but painfully necessary cuts in pay introduced in 2020 were required into 2021 for both management and staff. Following constructive discussions with pilots and cabin crew communities, structural changes covering pay scales and working practices to make the company more cost competitive were agreed. Similar structural change is required in other areas of the business. Aircraft were parked and sold, and work practices were made more efficient. Support staff worked from home, IT infrastructure was upgraded, and some key digital projects were realised for future benefit.
Notwithstanding the challenges, Aer Lingus remains focused on its ambition to return to 90% of normal capacity in 2022. The lifting of travel restrictions on 9thย January 2022, followed by societal reopening 13 days later has had a very positive effect. AerLingus.com had its busiest day since March 2020 – customers now have the confidence to book and we are delighted to be welcoming more and more customers on board as the year progresses.
The schedule for Summer 2022 triples capacity compared to Summer 2021 and will reach 90 per cent of 2019 levels by the summer peak. Today the EI061 departed for San Francisco – the first regular service to West Coast USA since March 2020. Aer Lingus is the only carrier serving West Coast USA this summer. Daily flights to Los Angeles start on 12 May, Seattle returns five times per week on 26 May.ย From June, the company will operate twice daily into Washington using the latest sustainable aircraft (A321LR Neo). Last week the Miami restart was announced, bringing to 14 the transatlantic destinations out of Ireland. Transatlantic services to / from Shannon restart in March restoring critical regional connectivity. Vital for the airline, but also vital for the Irish economy.
SIA Group issued this financial report:
SIA GROUP FINANCIAL PERFORMANCE Third Quarter FY2021/22 โ Profit and Loss
The SIA Groupโs unaudited financial results for the third quarter ended 31 December 2021 were announced on 24 February 2022. A summary of the financial and operating statistics is shown in Annex A. All monetary figures are in Singapore Dollars. The Company refers to Singapore Airlines, the Parent Airline Company. The Group comprises the Company and its subsidiary, joint venture, and associated companies.
The Singapore Airlines (SIA) Group posted a quarterly profit for the first time since the onset of the pandemic, recording a third quarter net profit of $85 million. This came amid a significant step-up in air travel to and through Singapore in the October- December 2021 period, as well as continued robust demand and strong yields in the cargo market.
Singaporeโs launch of Vaccinated Travel Lane (VTL) arrangements and its subsequent expansion, as well as the Groupโs nimble response that resulted in it being the first to open sales on almost all available routes, helped unlock pent-up demand during the year-end travel season. The Group carried 1.1 million passengers during the quarter, more than five times the number from a year before and double that of the second quarter of FY2021/22. Passenger capacity (measured in available seat-kilometres) grew 183.8% year-on-year, as the Group ramped up flights in response to the VTLs. By the end of the quarter, Group passenger capacity reached 45% of pre-Covid-19 levels.
Improvements in passenger and cargo revenue resulted in the Group revenue rising $1,249 million (+117.1%) year-on-year to $2,316 million. Passenger flown revenue increased by $650 million (+355.2%) to $833 million, on the back of a 556.8% growth in traffic (revenue-passenger kilometres) that outpaced capacity expansion, resulting in the passenger load factor rising 18.9 percentage points to 33.2%. Cargo flown revenue rose by $607 million (+81.6%) to $1,351 million, surpassing the $1 billion mark for the first time and setting yet another new quarterly record. Robust demand during the traditional cargo peak period was buoyed by retail inventory restocking and strong e-commerce traffic. Cargo yields rose significantly (+26.9%) amid an ongoing industry capacity crunch.
The expansion of operations resulted in Group expenditure growing $842 million (+60.2%) year-on-year to $2,240 million. This increase consisted of a $359 million increase (+131.0%) in net fuel costs, a $331 million increase (+26.0%) in non-fuel expenditure, and $152 million from the year-on-year impact of the fuel hedging ineffectiveness recorded last year and fair value changes on fuel derivatives. Net fuel cost rose to $633 million, mainly on higher fuel prices (+$330 million) and an increase in volume uplifted (+$173 million), which was partially offset by a swing from a fuel hedging loss to a gain (-$144 million). The increase in non-fuel expenditure by 26.0% was well within the 183.8% increase in passenger capacity and the 49.2% increase in cargo capacity.
As a result, the Group recorded an operating profit of $76 million for the three months ended December 2021, versus a $331 million loss from a year before (+$407 million).
The SIA Groupโs improvement in financial performance, quarter-on-quarter, is summarized as follows:As international air travel progressively recovered over the course of the year, the Groupโs operating loss for the nine months to December 2021 narrowed by $1,651 million or 75.3% year-on-year, to $543 million.
Revenue grew $2,442 million (+90.4%) from significant passenger and cargo flown revenue improvements. Passenger flown revenue increased $1,248 million (+369.2%) on the back of a recovery in passenger traffic. Cargo flown revenue rose $1,242 million (+62.6%), driven by higher loads carried (+54.3%) and yields (+5.5%).
Group expenditure increased by $791 million (+16.2%) year-on-year to $5,686 million. This increase consisted of a $793 million increase (+122.0%) in net fuel cost, a $488 million increase (+12.7%) in non-fuel expenditure, and an offset of $490 million from the year-on-year impact of the fuel hedging ineffectiveness recorded last year and fair value changes on fuel derivatives. Net fuel cost rose to $1,443 million mainly on higher fuel prices (+$763 million) and an increase in volume uplifted (+$419 million), which was partly offset by a swing from a fuel hedging loss to a gain (-$353 million). The increase in non-fuel expenditure by 12.7% was modest, relative to a 296.1% increase in passenger capacity and a 49.4% increase in cargo capacity. The Group continues to exercise cost discipline as it pursues efficiency and cost reduction initiatives as part of its ongoing three-year Transformation program that began in FY2020/21.
Group net loss was $752 million for the first nine months, a year-on-year improvement of $2,857 million. This was largely attributable to the better operating performance (+$1,651 million), and the absence of $1,630 million in non-cash cost items recorded in the previous year, partly offset by a reduction in tax credit of $474 million.
As a result of the stronger performance for the third quarter, the Group recorded an operating cash surplus1 of $322 million for the first nine months of the year. This reversed the operating cash burn that it had been experiencing since the start of the pandemic.
Third Quarter FY2021/22 โ Balance Sheet
By the end of the third quarter, the Group had raised $21.6 billion in fresh liquidity since 1 April 2020. This includes proceeds from the Rights 2021 Mandatory Convertible Bonds (MCB), which raised $6.2 billion in additional liquidity in June 2021.
As of 31 December 2021, the Group shareholdersโ equity was $22.1 billion, an increase of $6.2 billion compared to 31 March 2021. Cash and bank balances saw an increase of $4.3 billion, rising to $12.1 billion primarily due to the Rights 2021 MCBs. Total debt balances increased by $0.6 billion to $14.9 billion, mainly due to the increase in lease liabilities as a result of sale-and-leaseback activities. Consequently, the Groupโs debt-equity ratio fell from 0.90 times to 0.67 times. In addition to the cash on hand, the Group retains access to $2.1 billion of committed lines of credit which remains undrawn.
FLEET DEVELOPMENT
During the quarter, the strong demand for VTL services enabled the reactivation of A380 operations to London and Sydney. SIA took delivery of one Airbus A350 and four Boeing 737-8 aircraft, while Scoot took delivery of two A321neo aircraft. These aircraft will progressively join the operating fleet starting from January 2022.
As of 31 December 2021, SIAโs operating fleet comprised 121 passenger aircraft2 and seven freighters while Scoot had 50 passenger aircraft3 in its operating fleet. With an average age of six years and three months, the Group operates one of the youngest and most fuel-efficient fleets in the airline industry4.
NETWORK RECOVERY
During the quarter, with the continued expansion of its network, the Group saw a significant increase in the number of destinations that it served. This was led by the restoration of services to 12 cities in India, including VTL services from Chennai, Delhi, and Mumbai, as well as the resumption of flights to several points in South East Asia. SIA also launched services on the Singapore-Vancouver-Seattle route, and resumed flights to Houston (via Manchester). Scoot launched operations to Gatwick (via Bangkok) and Davao, and resumed services to Jeddah.
Note 1: Includes net cash provided by operating activities and repayment of lease liabilities, and excludes proceeds from forward sales.
Note 2: The 121-passenger aircraft fleet comprised 23 777-300ERs, 12 A380s, 56 A350s, 15 787-10s, 9 737-800s and 6 737-8s. Note 3: The 50-passenger aircraft fleet comprised 10 787-8s, 10 787-9s, 21 A320ceos, 5 A320neos and 4 A321neos.
Note 4: The current industry average fleet age is around 15 years and 3 months according to Centre for Asia Pacific Aviation (CAPA).
By the end of the December quarter, the Groupโs VTL network covered 31 cities across key markets in Australia, Europe, India, North America, South East Asia, and South Korea. The Groupโs passenger network covered a total of 85 destinations,5 up from 65 in the previous quarter, with SIA serving 63 and Scoot serving 35. The Groupโs cargo network comprised 95 destinations,5 up from 78 as at the end of the prior quarter.
In January 2022, SIA began passenger services between Milan and Barcelona. This is SIA’s second fifth freedom service in Europe. SIA also resumed passenger services to Denpasar in February 2022. Scoot launched operations to Miri, and resumed operations to Amritsar, Gold Coast and Hanoi during the first two months of 2022. In the coming months, the A380 fleet will expand its operations to Delhi, Mumbai, and New York via Frankfurt.
Based on current published schedules, the Group expects passenger capacity to reach 51% by March 2022. This should result in an average capacity of 47% for the fourth quarter of FY2021/22, compared to pre-Covid levels. The Group expects to serve over 70% of its total pre-Covid destinations by the end of the financial year.
SIA is expanding its VTL network to progressively include Cairns, Darwin, Dubai, Hong Kong, Manila, New York (Newark), and Phuket from 25 February 2022. SIA will also step up frequencies for flights between Singapore and several existing VTL destinations including Bandar Seri Begawan, Colombo, Male, and Phnom Penh. Scoot will progressively include Chiang Mai, Cebu, Clark, Davao, Hong Kong, Jeddah, Krabi, London (Gatwick), and Phuket to its VTL network, and will also increase its frequency for services between Singapore and Phuket. With these new additions, the SIA Group will operate VTL services from 49 cities in 25 countries to Singapore.
During the Northern Summer operating season (27 March 2022 to 29 October 2022), SIA will resume daily non-stop services to Newark. With this, SIA will have three daily services to the New York City metro area alongside twice daily flights to John F. Kennedy International Airport. The Singapore-Vancouver-Seattle service, which was originally planned as a seasonal operation, will continue beyond the current Northern Winter. A fourth daily Heathrow service will be added, reinstating London frequencies to pre-Covid levels. Services to Cairns and Darwin will also resume in the coming months.
PAVING THE WAY AHEAD
SIA launched its all-new narrowbody cabin products, including lie-flat Business Class seats, on the Boeing 737-8 in November 2021. This sets a new standard in the short-haul segment, and provides customers with greater product and service consistency for Business Class across SIAโs fleet.
Note 5: Number of destinations include Singapore.
In December 2021, SIA announced that it will purchase seven Airbus A350F freighters, with options for five more aircraft. This order was firmed up in February 2022. SIA will be the launch operator for this aircraft, with the first delivery expected in the fourth quarter of 2025. The A350Fs will burn 40% less fuel compared to SIAโs Boeing 747-400F freighters on similar missions, reducing carbon emissions by around 400,000 tonnes annually based on current operations, and boast a longer range that offers greater flexibility in deployment. Renewing the freighter fleet reflects SIAโs continued investment in the air cargo segment, a core business for the Company.
SIA successfully raised a seven-year US$600 million (or about S$810 million) bond in January 2022. This is SIAโs second US dollar-denominated bond issue, building on its successful debut issuance last year. Inclusive of this bond issue, SIA has raised around $22.4 billion in additional liquidity since 1 April 2020. SIA also has access to more than $2.1 billion in committed lines of credit. This liquidity strengthens its financial foundation, enabling the Group to make strategic investments to secure its industry- leading position.
Deepening collaboration with like-minded airlines remains an integral part of the Groupโs strategy. The recent expansion of separate partnerships with Garuda Indonesia and Malaysia Airlines will see the airlines working closely to offer more options and value to customers, and drive traffic to their respective hubs. It would also support the recovery of South East Asiaโs tourism industry from the impact of the pandemic.
KrisFlyer continues to bolster its position as a leading lifestyle-centric rewards program. In January 2022, KrisFlyer announced the extension of membership statuses by a further year. The program was also enhanced to provide members with more recognition and greater benefits, including further opportunities to earn and redeem miles with both Singapore Airlines and Scoot.
The Group has made good progress in cost and revenue initiatives under its three-year Transformation journey, with multiple projects that reinforce the Groupโs foundations underway. Collaboration with external partners supports these goals. The recently launched SIA-National University of Singapore (NUS) corporate laboratory, for example, will help develop innovative solutions that enhance the customer experience and travel journey, optimize revenue generation, and increase operational efficiency.
The SIA Group remains focused on its long-standing commitment towards environmental sustainability and decarbonization across its operations. Together with the Civil Aviation Authority of Singapore (CAAS) and global investment company Temasek, the Group has embarked on a pilot program looking into the operational and commercial viability of using sustainable aviation fuels (SAF) in Singapore. This includes purchasing 1.25 million litres of neat SAF, blending it with refined jet fuel, and having it delivered to Changi Airport via the airportโs existing fuel hydrant system to SIA and Scoot flights. With sustainable aviation fuels viewed as a key decarbonization lever, this pilot supports the Groupโs commitment to achieve net zero carbon emissions by 2050.
OUTLOOK
Singaporeโs VTL arrangements have been a game changer for the SIA Group, facilitating quarantine-free mass travel for the first time since the pandemic began. While demand should continue to recover, especially on VTL services, passenger traffic is likely to moderate in the fourth quarter after the end of the year-end holiday season.
The emergence of the Omicron variant in December 2021 resulted in the imposition of additional border restrictions by some governments. However, those measures gradually eased as concerns about the virulence of the variant abated. Several key markets have further relaxed testing requirements for incoming passengers, in line with their goal of living with the Covid-19 virus. The Group will remain nimble and proactive in adjusting its capacity and network, in tandem with the prevailing market conditions and regulations.
The SIA Group will also remain alert to all revenue and growth opportunities that come its way. For example, SIA is operating dedicated flights between Singapore and Beijing between January and March 2022 in support of the 2022 Winter Olympics, transporting international officials and athletes to China for the Games.
Following a record peak period in the third quarter of FY2021/22, overall air cargo demand is expected to ease in the fourth quarter. This is in line with seasonal fluctuations, and the traditional slowdown in exports during the Lunar New Year holiday period. Nonetheless, both air and sea freight capacities are expected to remain tight during the quarter, supporting loads and yields.
Fuel prices have been trending higher and volatility is expected to persist in the months ahead. The Group will continue to keep a tight rein on costs, while supporting the expansion of operations in line with demand.
Sanctions continue to be invoked against Russia and Russian companies.
The U.K. has banned Aeroflot and Russian aircraft from their airspace.
In response, Russia has banned British registered aircraft from its airspace.
As a result, British Airways has cancelled its flights to Moscow.
British Airways issued this short statement:
โWe have suspended our flights to Moscow and also the use of Russian airspace, following the confirmation of Russian government restrictionsโ
A new cold war is descending on Europe.
Antonov Airlines’ (Antonov Aviation Company) base at Hostomel Airport near Kyiv in Ukraine has been seized by Russian paratroopers.
It is unclear what is the status of the Antonov fleet.
Ukrainian forces have vowed to retake the airport from the Russian aggressors.
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