Singapore Airlines stated Friday that it could report a significant operating loss in the quarter ended March 31, partly due to a slump in fuel prices that led to major hedging losses and that it could postpone aircraft deliveries.
The airline stated working cash flows have been anticipated to remain negative in the quarter ending on June 30 at a time when most of its fleet is grounded due to the coronavirus crisis. Additional gas hedging losses are anticipated in that quarter, it mentioned.
The airline stated in February it had entered fuel hedging contracts till March 31, 2025. That includes hedging 51% of its jet gas JET-SIN at $78/barrel and 22% of Brent at $58/barrel in the present financial year. Jet gas is now below $22/barrel, and Brent is under $30 a barrel.
Dealer UOB Kay Hian in March stated the airline faced S$2.5 billion in marked-to-market hedging losses by the end of that month.
The airline, which snagged S$15 billion of funding underwritten by its greatest shareholder, state investor Temasek, is due to report its fourth-quarter outcomes on May 14.
The airline said with the benefit of sturdy outcomes for the first nine months when it reported an S$813.6 million ($575.55 million) operating revenue, it expects to record a small working profit; however, a net loss for the full year ended March 31.
Singapore Airlines and regional arm SilkAir have cut 96% of capacity through the end of June, and low-cost arm Scoot has reduced 98% due to a lack of demand and coronavirus-led travel bans.