According to the group&rsquo s latest operating statistics, it carried 9.564 million passengers in the fourth quarter of its financial year 2023/2024 covering January to March 2024, up over 6 per cent from 9 million in the fourth quarter of FY2018/2019 from January to March 2019, which is the last meaningful pre-pandemic quarter.

 

The airline exceeded these pre-pandemic numbers even though the SIA Group&rsquo s passenger capacity is now virtually the same as that during the fourth quarter of FY2018/2019. That meant the passenger load factor during the January-March 2024 fourth quarter was averaging 86.4 per cent &ndash up from an average of 81.9 per cent during the same period in FY2018/2019.

 

In all likelihood, this year&rsquo s full-year results will exceed the last financial year&rsquo s, when the group posted a record group revenue of $17.78 billion. Group operating profit for the year ended March 31, 2023, came in at a record $2.69 billion, while net profit hit a record $2.16 billion for the year. The group passenger load factor hit 85.4 per cent, the highest in its history.

 

Why do I believe the April 2023-March 2024 financial year will deliver another record?

 

Group revenue for the nine months to December 2023, which are the first nine months of FY2023/2024, rose by $981 million or 7.4 per cent to a record $14.24 billion. This was driven by a $1.97 billion or 20.2 per cent increase in passenger flown revenue. This was partially offset by a $1.34 billion or 45.3 per cent drop in cargo flown revenue.

 

Expenditure grew $808 million or 7.2 per cent, driven by a $1.1 billion or 15.2 per cent increase in non-fuel expenditure but mitigated by a $292 million or 7.2 per cent drop in net fuel costs. Net fuel costs fell to $3.74 billion, mainly due to a 22 per cent drop in fuel prices that was partially offset by the higher volume uplifted and a lower fuel hedging gain.

The group operating profit rose $174 million or 8.7 per cent year on year to a record $2.16 billion.

 

As a result, the group&rsquo s net profit for the nine months rose $545 million or a whopping 35 per cent year on year to a record $2.1 billion, surpassing the $2 billion mark for the first time. This was mainly due to the better operating performance, with the airline scoring net positives from interest income versus finance charges as well as from the share of profits versus losses from associated companies the previous year.

 

These numbers have continued climbing strongly through the January-March period, which is SIA&rsquo s final quarter of FY2023/2024.

 

SIA and its low-cost carrier arm Scoot carried a combined 3.3 million passengers in March, up 20.7 per cent from year-ago figures. Group passenger traffic rose 13.9 per cent year on year to 12.7 billion revenue passenger-kilometres, which refers to the number of passengers carried multiplied by the distance flown.

 

The group &ldquo continued to see strong passenger traffic and load factors across all route regions&rdquo , SIA said in a bourse filing in mid-April.

Some analysts have already put out bullish outlook reports on the group.

 

Recently, CGS International analyst Raymond Yap ventured that SIA might post its highest-ever net profit of almost $2.7 billion for FY2024 and reward shareholders with a final dividend of 38 cents a share. That assumes a net profit of between $500 million and $600 million for the January-March 2024 quarter.

 

&ldquo We expect SIA to post a solid $550 million core net profit and $600 million earnings before interest and taxes in (Q4 FY2024) on the back of strong passenger demand and robust passenger load factor,&rdquo he wrote in an April 29 report. &ldquo This should take (FY2024&rsquo s forecast) core net profit to $2.5 billion, which is 32 per cent above FY2023&rsquo s $1.9 billion, and likely the highest in SIA&rsquo s history.&rdquo

 

But Mr Yap does expect earnings of the national carrier to come under pressure from FY2025 &ndash April 2024 to March 2025 &ndash from compressed yields, higher operating costs and limited capacity increase.

 

While there is no denying the challenges ahead, particularly uncertain fuel prices, geopolitics, supply chain issues and increasing competition, there is one other factor that most analysts have not mentioned. SIA remains the premier regional airline in South-east Asia for seamless intercontinental flights to virtually every destination around the world. If you were originating in any Asean capital, chances are you will transfer to an SIA flight at Changi Airport.

 

Countless partnerships, alliances and interline arrangements have steadily kept up the Singapore carrier&rsquo s passenger load numbers. In the coming years, there could be more benefits to be reaped if its investment with India&rsquo s Tata group in the rejuvenated Air India delivers as expected.

 

All this did not happen by accident.

 

Strategic financial planning during the Covid-19 years, when the airline raised $23.5 billion in additional liquidity, and its first-mover advantage when it was among the first to restore capacity and put flights in the air when borders fully reopened in April 2022, have kept SIA flying high. In fact, its cargo operations were running full-on during the pandemic as cargo carriers and bellyholds of passenger carriers transported vaccines, food and other essential materials around a locked-down world.

Running an airline is a complex venture. There are too many external factors, especially globally, that can impact operations, costs and profit. There is an old adage: &ldquo If you want to end up as a millionaire, first invest a billion dollars in an airline.&rdquo

 

The airline industry&rsquo s fate was once described by a former director general of the International Air Transport Association as being similar to that of Sisyphus, a figure from ancient Greek mythology who was cursed by the Gods to roll a massive boulder up the hill, only for it to roll back down each time. While some may describe the Sisyphean task as endless and futile, others also see it as a testament to resilience, and the will to survive and grow against all odds.

 

SIA would surely fit the uplifting part of the description, and in remaining a great way to fly, take investors along to greater heights.