Singapore Airlines looks beyond strong profits to big things from Air India deal

Singapore Airlines’ historic profitability is back. This has helped boost the carrier’s confidence in the future, underpinning some audacious moves to maintain — and expand — its position as a leading global airline. The carrier posted a 16% operating margin in the December quarter, the third in its fiscal year that ends in March; that bested its performance during the first six months of its fiscal year by a point. Singapore Airlines was lifted by fuel hedge gains, without which its operating margin was 12%, but even that was two points better than three years earlier. It reported an operating profit of S$755m ($565m) for the three months ending in December. What’s more, Singapore Airlines posted record revenues of S$4.8b, up 6.7% year-over-three-years, in the December quarter. Unit revenues, measured by revenue per available seat kilometer, also set a record at 10.8 Singapore dollar cents, or up nearly 33 percent compared to 2019. Cargo was one area of weakness for Singapore Airlines. Revenues and yields decreased in the December quarter from the quarter before with the carrier citing a weaker global macroeconomic environment, as well as the increase in aircraft belly capacity. However, cargo yields were still more than double what they were three years earlier. Set against the backdrop of strong financial results, not to mention a bullish outlook, Singapore Airlines made a number of deals looking toward its future. The most significant was an agreement in November with the Tata Group to take a 25.1% stake in Air India in exchange for the group’s minority stake in Vistara and S$360m. Singapore Airlines has repeatedly cited the deal as key to its direct participation in the “large and fast-growing” Indian market. Air India committed to at least 470 Airbus and Boeing aircraft earlier in February in the airline’s largest-ever order.<br/>