Singapore Airlines Ltd. swung back to quarterly profit for the first time since the onset of the pandemic, helped by strong cargo demand and the island city’s sustained efforts to revive international travel. 

The carrier reported net income of S$85 million ($63 million) for the third quarter ended Dec. 31 versus a loss of S$142 million the same period a year earlier, according to an exchange filing Thursday. Sales more than doubled to S$2.32 billion.

Singapore Airlines has been steadily boosting air-passenger traffic as the government reopens borders. Vaccinated travel lanes with various countries in Europe that started last last year have been expanded as the city-state shifted away from its Covid-zero policy. To see it through the leaner times, Singapore Airlines has raised S$21.6 billion in fresh liquidity since April 2020.

“Singapore’s vaccinated travel lane arrangements have been a game changer for the SIA Group, facilitating quarantine-free mass travel for the first time since the pandemic began,” the airline said. However it cautioned that while demand should continue to recover, “passenger traffic is likely to moderate in the fourth quarter after the end of the year-end holiday season.”

As a result of the stronger performance, Singapore Airlines recorded an operating cash surplus of S$322 million for the first nine months, reversing an operating cash burn. Chief Executive Officer Goh Choon Phong said in November that the company’s monthly cash burn rate had been cut to S$18 million from as much as S$400 million a year ago and the airline is approaching break-even.  

Passengers carried by Singapore Airlines in the final quarter of 2021 numbered around 1.1 million, a jump of more than fivefold from 12 months earlier, after vaccinated travel lanes started with Germany and Brunei in September. Now, people who are fully vaccinated are allowed to enter the city-state from about two dozen countries with Covid tests replacing mandatory quarantine.   

By the end of December, the carrier’s passenger capacity had reached 45% of pre-Covid levels, the company said Thursday. Singapore Airlines filled 50.4% of seats on its planes in December, the highest since March 2020 when the pandemic wiped out travel globally and thousands of planes were grounded.

Cargo Strength

Yields on air freight soared 27% in the October-December period as people continued to shop online—a huge trend during the pandemic—and congestions at sea ports prompted some exporters to move their goods by air. While demand is expected to ease this quarter, air cargo capacity should remain tight and support those loads and yields, Singapore Airlines said. 

Last week, Singapore Airlines firmed up its order for seven Airbus SE A350 freighters to replace its aging fleet of Boeing Co. 747-400s. The airline also swapped existing contracts for A320neo and A350-900 passenger planes for the cargo aircraft, which will be delivered from the fourth quarter of 2025. 

The carrier posted a fuel-hedging gain of S$56 million in the October-December quarter, compared with a loss of S$88 million a year ago. It had a mark-to-market loss of S$1 million in ineffective fuel hedging and fuel derivatives, compared with a S$151 million gain.

While Singapore suspended the sale of new tickets for vaccinated travel lane flights from Dec. 23 to Jan. 20 to counter the spread of omicron, it didn’t shut things down completely. And since then, restrictions have been eased. Daily quotas for those traveling abroad and returning under the lanes are being increased and more destinations have been added, most recently the Philippines and Israel, starting from next month.

Manila, Phuket

By the end of March, Singapore’s flag carrier expects passenger capacity will be at 51% of pre-Covid levels and it will be serving more than 70% of its destinations. 

Singapore Airlines said last week it will expand its vaccinated travel lane network to 49 cities in coming weeks, adding hubs like Dubai and Hong Kong, which is still adhering to a strict Covid-zero policy, causing significant pain to Cathay Pacific Airways Ltd. The city-state’s carrier also plans to increase the frequency of flights on several existing routes.

The airline is expanding its VTL network to cities including Carins, Darwin, Manila and Phuket from Friday. It plans to operate its A380 aircraft to Delhi, Mumbai and New York via Frankfurt in the coming months. During the March-October period, it will also add a fourth daily service to London, reinstating frequencies to pre-Covid levels, and operate three daily flights to the New York metro area alongside twice daily flights to John F. Kennedy International Airport.

“Several key markets have further relaxed testing requirements for incoming passengers, in line with their goal of living with the Covid-19 virus,” Singapore Airlines said. “The Group will remain nimble and proactive in adjusting its capacity and network.”