IndiGo, Singapore Airlines, Air France-KLM and Japan Airlines register quarterly losses

IndiGo, Singapore Airlines, Air France-KLM and Japan Airlines posted quarterly losses.

IndiGo Parent shares fall nearly 5% after record quarterly loss

Shares of Interglobe Aviation Ltd, the operator of India’s largest airline IndiGo, fell 4.6% per day after the company posted a record quarterly loss as the COVID-19 pandemic weighed on a nascent recovery.

The New Delhi-based airline’s average daily cash consumption rose to 334 million rupees in the quarter, and she said scheduled international operations still remained a challenge.

Yields, a measure of profitability, fell 23.2% to 3.48 rupees in the first quarter, with the company warning the measure would remain under pressure until demand recovers.

“Even according to our airfare tracker, May 21 airfares have fallen to last year’s levels and have been hovering around the average bands since the start of June 21,” analysts at Motilal Oswal said, calling it of “scathing concern”.

CEO Ronojoy Dutta told reporters in a post-benefit call that he expects capacity to return to pre-pandemic levels by the end of the year, but warned that a third wave of infections could quickly disrupt matters again.

Capacity for the first quarter increased 433.2% from the same period last year, when the company’s operations nearly came to a halt as India was quarantined to curb the spread of the virus .

For the first quarter ended June 2020, capacity was down 90.9% compared to the same period a year earlier.

The company’s net loss reached 31.79 billion rupees ($ 426.84 million) in the last quarter, up from 28.49 billion rupees a year earlier. This is the company’s sixth consecutive quarterly loss.

IndiGo has reported losses since the pandemic brought global travel to a halt and hit airlines around the world. Just as the airline was showing signs of recovery, the industry was hit by the renewal of travel restrictions.

Singapore Airlines’ first quarter loss narrows as freight demand increases

Singapore Airlines Ltd (SIA) posted a loss of S $ 409 million ($ 302 million) in the first quarter, lower than a year earlier, helped by a strong air cargo market and no major depreciation.

The airline projects passenger capacity to reach 33% of pre-pandemic levels in the second quarter and said it will serve at least 50% of the locations it previously occupied by the end of September.

The airline, like its Hong Kong rival Cathay Pacific Airways Ltd, has no domestic market and relies solely on international travel at a time when most borders remain closed.

SIA carried 132,600 passengers in June, an improvement from its June 2020 figures but a drop of 96% from the same month two years earlier, before the pandemic struck.

It only occupied 16.1% of seats in June, with its flights relying heavily on freight for income at a time when the freight market is strong.

The company posted a record loss of S $ 1.1 billion in the first quarter of the previous year.

Revenue for the just-ended quarter was S $ 1.30 billion, up from S $ 851 million a year earlier.

Air cargo revenue rose 32.4% and the company said demand fundamentals for the business remained strong, although new pandemic-related restrictions in parts of the world could cause uncertainty in the near future. term.

SIA, unlike competing national carriers in Southeast Asia, still has a healthy cash balance to help it get through a period of low traffic. It recently raised S $ 6.2 billion in convertible bonds underwritten by its largest shareholder, state investor Temasek Holdings.

The airline also said 98% of active pilots and cabin crew had been vaccinated.

Air France-KLM cuts losses as bookings start to recover

An easing of coronavirus-related travel restrictions is generating the first signs of recovery at Air France-KLM, the airline group said, as it unveiled a lower loss for the second quarter coupled with positive operating cash flow.

As passengers return to the air, uncertainty over COVID-19 rules continues to be a problem. KLM said with a majority of Europeans now fully vaccinated, countries should act quickly to harmonize regulations allowing more air travel.

“Obviously the first quarter was terrible and probably even more so for KLM due to the very specific measurement of double tests,” Pieter Elbers, head of the group’s Dutch unit, said in an interview, referring to a requirement in the Netherlands for passengers to provide two negative tests on return flights.

“In the second [quarter] we are seeing significant improvement. We see the numbers increasing even in the second quarter, June was better than April and in July, the first week of July, Amsterdam was the busiest airport in Europe, “he told Reuters.

But Elbers said people were still reluctant to travel and called on European countries to reopen borders.

The Franco-Dutch group recorded losses before interest, taxes, depreciation and amortization (EBITDA) of 248 million euros for the quarter – marking an improvement of 532 million euros from heavy losses a year earlier when the pandemic triggered global lockdowns.

Third quarter EBITDA is expected to be positive, he said, adding that his medium-term operating margin target remained unchanged.

While long-haul capacity is increasing again following the reopening of the North Atlantic to Americans visiting Europe, Air France-KLM now expects capacity of 60 to 70% compared to 2019 in the third quarter, against 55 at 65% estimated in May. .

In contrast, IAG, owner of British Airways, made a more cautious bet, saying summer capacity would reach 45% of pre-pandemic levels.

As travel to the United States is still closed to the majority of Europeans, Air France-KLM however refrained from giving capacity forecasts for the fourth quarter and called for reciprocity in the opening of borders as well as ” faster vaccination deployments around the world.

As Americans slowly return to Europe, Elbers said, “I hope the United States will also reopen its borders soon and we can see a further increase in travel. If I see the trend of the last few months, we can really be kind to positive. “

For the first time since the start of the crisis, free operating cash flow after rental payments is positive at 210 million euros. Its two major carriers posted positive liquidity on the back of higher ticket sales.

The group sees “good” summer bookings in Europe, although they arrive later than usual, said chief financial officer Steven Zaat.

The turnover of the airline jumped to 2.75 billion euros against 1.57 billion euros.

Fuel costs increased by around 300 million euros, mainly due to additional capacity as well as a slight impact from higher oil prices, amortized by more favorable hedging contracts.

Japan Airlines cuts first quarter operating loss to $ 757 million as costs drop

Japan Airlines (JAL) reported an operating loss of 82.65 billion yen ($ 756.87 million) in the first quarter, an improvement over the previous year as cost reductions related to the pandemic came into effect and travel demand fell from a very low base.

The result for Japan’s second-largest airline for the three-month period ending June 30 was worse than the estimate of a loss of 73.5 billion yen from five analysts polled by Refinitiv, but lower than the operating loss of 131 billion yen in the same quarter last year.

JAL did not provide a profit forecast for the full year, saying the uncertainty made forecasting too difficult. The carrier could post an annual operating loss of 108.6 billion, according to the average of 10 analysts polled by Refinitiv.

The Japanese airline, like other carriers, has depleted its cash reserves to keep the planes and workers it will need when travel demand rebounds.

JAL expects its cash consumption rate to fall to around five billion yen per month in the second quarter, from 10 billion to 15 billion yen per month in the first quarter, chief executive Hideki Kikuyuma told reporters. .

“While repayments have been declining since about June, cash consumption is declining,” he said. “Based on the return of domestic passenger demand, we expect operating cash flow to turn positive around September.”

Passenger numbers for domestic flights in the April-June quarter more than doubled from the previous year, but were below a third of pre-pandemic levels as Japan grapples with record levels of COVID-19 cases.

International traffic quadrupled from last year, but passenger numbers totaled just 6.2% from the same quarter two years ago.

A bright spot for the airline has been strong demand for freight, although JAL does not operate dedicated cargo planes like rival ANA Holdings Inc.

To accommodate what it expects to be a long-term decline in business travel, JAL is developing budget units that will focus on tourism demand in Asia.

It is also withdrawing 26 of its old 777 widebody jets and adding new Airbus SE A350s.

News by Reuters, edited by Hospitality Ireland. Click on subscribe to register for Hospitality Ireland printed edition.

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