Singapore Airlines Limited (C6L) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to the Singapore Airlines Full Year Results Media and Analyst Briefing. My name is Siva, and I am from the Singapore Airlines Public Affairs Department. Very happy to see everyone again this morning. For those who are familiar, we'll go through the usual program -- the format rather. We'll first have Jo-Ann Tan, our CFO, come up to talk about the full year results. We'll then have Goh Choon Phong, our CEO, to talk about the outlook and the strategy. So without any further ado, can I invite Jo-Ann, please. Thank you.

Good morning, ladies and gentlemen. Thank you for taking the time to attend our, analyst and media briefing. Okay. So to start, let me just go through some of the key takeaways, and you have seen this in our news release. For the year '23, '24, we achieved our highest ever operating record of $2.73 billion, exceeding last year's -- previous record. Passenger revenue rose $2.3 billion. Cargo revenue fell $1.5 billion, largely on the back of lower yields. Our net fuel cost fell largely due to lower fuel prices despite higher volumes uplifted. For the full year, we achieved a record net profit of $2.67 billion, $518 million higher than a year ago. This was driven by items after the operating line, but more of that later. I will not cover the outlook and our strategies in response to that because CEO will give you a comprehensive update data. Subject to shareholders' approval, we have proposed a final dividend of $0.38 to be paid on the 21st of August. Together with our 10 times interim dividend, this represents a total dividend of $0.48 dividend yield of 7.5%. Referenced at $6.40 closing share price as at 31st of March, which is the last day of the financial year. Now on to the numbers. SIA Group passenger capacity recovery continues, with second half ASK growth of 17.7%. For the full year, our ASK grew almost 23%. Looking at group financial results. Full year increased capacity and the robust passenger demand led us to a full year operating revenue of $19 billion. This is $1.2 billion higher than a year ago. Expenses increased 8%, trading capacity increase of 16%, mainly on account of lower fuel, but more on that later. Ex fuel expenses was up 13.5%. Lower than a capacity increase of 16%. So all in, operating performance improved $35 million versus last year. For the second half, revenue continued its growth trajectory of 5.3% to hit $9.85 billion. This is actually a record for half yearly revenue for the group. Our total expense grew 9.8%. Fuel cost was up 11.1%, whereas ex fuel expense was up 9.2%. Both were below the capacity increase of 12.6%. As a result, second half operating profit crossed the $1 billion mark, coming in at $1.17 billion. Looking at group revenue. Second half passenger revenue grew $750 million on the back of a 17.5% growth in passenger carriage, offset by a 6% yield decline from increased competition. Higher passenger revenue was partially offset by the $446 million decline in cargo, mainly coming from new declines as small valuable capacity returned. For the full year, passenger revenue was up $2.3 billion on the back of a very robust 26.6% growth in passenger carriage, partially offset by 7.6% yield declines. Cargo revenue came in at $2.1 billion, which was 41% lower, almost entirely due to weaker yields. But notwithstanding this decline, if you compare cargo revenue with pre-Covid, our cargo revenue was still 8.6% higher. Looking at our group airlines operating steps. We saw very robust passenger demand consistently across the full year, and the group achieved a record load factor of 88%. Individually, both the FSC and LCC achieved respective load factor records for the full year. FSC load factor came in at 87.1%, a record. LCC came in at 91.2%, another record. Driven by yield declines, both airlines saw their declines in RASK, which is really a measure of revenue per available seat kilometer. But if you compare this with our pre-COVID performance, the RASK for both the FSC and LCC is still tracking over 20% above our pre-COVID levels. Moving on to cargo. In the second half, cargo loads grew 9.7% year-on-year. This is on account of robust e-commerce flows and supported by a lift in airfreight coming from the security concerns in the region. Looking at quarter 4, which is seasonally weaker quarter for cargo, our loads grew 16.1% year-on-year. pushing cargo load factors up 3.5 percentage points compared to a year ago. Group expense. Expenditure grew 9.8% in the second half and 8% on a full year basis. Both were lower than capacity growth. Now if you look at the breakdown of our major cost components, fuel cost was lower by 2.5% despite higher volumes. I will elaborate more in the next slide. Other cost components, staff costs, it increased 16.2% year-on-year, mainly due to higher pay and allowances from higher staff strength and average pay, the absence of payroll-related government grands. Crew allowances also grew in line with the increase in flying. Depreciation and these aircraft charges increased 3.8% because of higher depreciation from heavy maintenance and engine overhauls as well as additional depreciation from aircraft deliveries within the financial year. Passenger costs increased more than the increase in passenger carriage as we continue to improve our product offering particularly in-flight meals and product enhancements, such as the provision of free WiFi to our [indiscernible] members. Other cost categories you see here largely increased in line with capacity or with the traffic carriage. Looking at unit cost, excluding fuel across our group airlines and measured in cents for CTK, we were marginally lower by 0.2% year-on-year. This is the story of fuel. Fuel prices was lower by 18.2%, and this decrease more than offset the increased cost from higher fuel volume and lower hedging gains. The table you see in the slide below shows our average fuel price before and after hedging. Looking forward, we are continuing to hedge on a declining batch basis over a rolling 18 months period, as you can see in the first table. The second table shows the gains from our closed-out trades that we have taken for ineffective hedges. Group operating profit. For the second half, operating profit crossed the $1 billion to achieve $1.17 billion. Together with the record first half performance, operating profit rose $35 million to hit a record $2.73 billion for the full year. If we just do a teardown, our operating profit improvement was primarily due to higher passenger revenue and lower net fuel costs, which partially offset the lower cargo revenue and higher expenditure. For the financial year, we also benefited from a noncash ForEx gain of $37 million, reversing the loss of about $200 million from the year ago. Now if we look at the operating performance for the main companies within the group, the FSC operating profit for the parent airline at $2.6 billion is a record for us, higher by $34 million. LCC operating performance, albeit lower $30 million year-on-year, but with the operating profit coming in at $118 million. This is still a very credible performance. [ EC ] from an operating loss of $26 million to an operating gain of $2.3 million this year from more maintenance activities from an increase in flying. Looking at net line. Second half net profit of $1.23 was marginally higher than last year. On a full year basis, the group bettered the performance to achieve $2.7 billion, $518 million higher compared to last year. This shows a teardown of the contribution. The improvement came primarily from items after the operating line. We had a net interest income against net finance charges last year. Lower cost expense and share of profits of associated companies against loss last year. If I can expand on the tax expense. Tax expenses fell despite an increase in profit before tax, largely due to a recognition of prior year unutilized tax losses by Scoot, a reversal of deferred tax liabilities associated with engine credits and a [ sting ] to nontaxable capital exchange gains recorded this year from nondeductible capital exchange losses last year. As I mentioned at the start, subject to shareholders' approval, we are proposing final dividend of $0.38, together with interim dividend of $0.10, total dividend for the year would be $0.48. Balance sheet. Just to point out that at 31st of March, group shareholder equity was lower by $3.5 billion. compared to last year, and this is coming from the partial redemption of $5.1 billion of MCBs, including crude yield. Total debt balance also decreased $1.9 billion to $13.4 billion because we have repaid some of our borrows. So as at 31st of March of 2024, our group's debt equity ratio is now 0.82. Cash and cash balance also decreased $5 billion from the following activities: redemption of MCBs, repayment of borrowing and payment of dividend. But we had a very strong cash generation from operations this year at $5.1 billion, which mitigated some of the decrease. Overall position at the end of the financial year at $11.3 billion is still very strong. We have also announced yesterday that we will be making a full redemption of the remaining MCBs in June. The accreted principal amount of this is $1.74 billion. With this final redemption, all $9.7 billion worth of MCBs that we issued in 2020 and '21 during COVID will be fully redeemed marking a very strong recovery from COVID. This is sharing our group operating fleet plan. For the next -- for the coming financial year, there are 16 planned deliveries versus 7 retirements from operating fleet, adding 9 aircraft units to the fleet. Now this is based on contractual delivery positions. And finally, my last slide. This is projected group CapEx for the next 5 years, fairly similar to what we last showed you in the second half briefing. Okay. That's my last slide. And with that, can I invite our CEO, Mr Goh. Thank you.

Good morning, ladies and gentlemen. Again, welcome to join us at this media briefing -- media and analyst briefing. I will touch on 2 key points. You will recall that during the COVID period, we emphasized that we wanted get to emerge stronger. And by emerging stronger, we meant to achieve these two things. To be first off the block when the recovery comes and to ensure that as we emerge, we continue to lead in the industry. We have achieved both. And even up to today, you'll see that our recovery to pre-COVID capacity remained ahead of the airlines in Asia Pacific. Because of achieved both, we were also able to achieve outstanding financial performance. We had record load factor, revenue, operating profits and net profit in the financial year '22, '23. And this year, we're breaking all of this record again. But it's not just a financial performance. We've done well because we say that we want to be -- continue to be the leader in the industry. So we have also done well by our customers. You can see how the net promoter scores as well as the customer satisfaction scores have gone up significantly. We have also done well by our staff. You look at -- this is a result of climate survey that we've conducted. You can see also how our staff rate the experience with the company. We've done well by our shareholders. Jo-Ann has earlier presented the -- our intention to redeem the remaining tranche of the MCBs with that $9.7 billion, the whole $9.7 billion will be reduced. And this is within a 2, 3 years' time frame, not a [indiscernible]. You will recall that at the beginning of the crisis, we had very strong support from all our shareholders, Tamasek, of course, but also all the other shareholders to successfully raise $15 billion, of which $9.7 billion were actually in the form of MCBs. Removing or fully paying out these MCBs to the group yields also means that the concern over dilution should this MCB be converted shares are no longer there for our shareholders. We have in the previous financial year, paid good dividends. And this year, even better dividend yield is proposed, reflecting the even better performance that we have achieved this financial year. And of course, the share price, those are subscribed to the share at $3 are today looking -- Well, it's between $6.7 to $6.8. I just look at the SGX listing price earlier, but more than double. Of course, the $15 billion from our shareholders were not all we raised. During that period, we went on to raise more money to reach $23.5 billion. And those are from -- largely from sales and leasebacks to financing, bonds. And we were able to raise them at a very attractive interest premium to the company. We receive commissions during this whole period across the Best Airlines award, both from a perspective of customers and also for industry professionals. Most of my company, the only company in Singapore and very few in Asia made up this lease of 50 most admired company in the world. And also how we are perceived as an employer. We have to remember that the airline industry was one of the worst affected during the COVID. And I think it's -- all of us kind of appreciate that it is no [indiscernible] to be able to do all this during the time when it was so challenging. And we would like to thank all our key stakeholders for it. Certainly, our customers who have stayed with us and continue to support us. Our shareholders who came in, and we are very happy that we are able to bring benefits to their trust and their investments. The government has taken proactive steps to make sure that the borders are open between Singapore and the rest of the world. Of course, we are not operating alone or our ecosystem partners. We're involved in also reviving the Singapore hub. And last but not least, our incredible people. But it's not just COVID -- what we've done during COVID, that is supporting the company's progress going into the future. We're well positioned for the future. More so, I would say than most of the airlines, why so? If you look at the challenges, not very different from any other airlines. In fact, probably the most other organizations, other businesses as well. And in the case of airline business or airline industry, I think the audience would know that we are affected by many things around the world. So we must always be -- just so these are not new challenges per se, these are challenges in different severity that we have been handling all through. More importantly, do we have what it takes to succeed despite those challenges? And all new challenges may evolve in the future. We believe so. Even throughout COVID-19, before COVID, even through our COVID, we continue to invest in the three pillars of our brand promise, whether it's in servicing, our customers equipping our frontline staff with digital tool that could help them better anticipate and serve our customers' needs, improving our product offerings ranges from our seat products, free WiFi, unlimited WiFi for everyone, improvement of -- even in our meals, provisions, the latest been the [indiscernible] meals and others. And certainly, also in network, we have introduced new points and Scoot, our subsidiary company have introduced even a new fleet type. Which again enable us to serve points such as [indiscernible] that we couldn't be foster because of the size of the plane. But it's not just that, it is also some of the strategic initiatives that we have done many years back that we are seeing it bearing fruits and supporting the entire group. Scoot is one example. We set it up in 2011. This morning, 10 years ago, it is 2024, right? And today, I think we can undeniably say that Scoot is a leading LCC in our part of the world. And it will continue to expand. As I say, we have just introduced a new fleet. So we will not stop looking at ways for which we can grow. And the Scoot model allow us and grow in a way that SIA couldn't before. Expansion in our collaboration with other like-minded carriers, and many of them, we are looking at or have -- we have established a strong, deep commercial cooperation with. Bearing in mind that we are in a region of growth, Southeast Asia, and we are well positioned to be able to participate directly in this growth in Southeast Asia. And some of these partnerships will enable us to expand our network in collaboration in a win-win manner with our partners in the region. Of course, also our multihub, India, who was first announced in 2013. But in the case of India, you would appreciate that when we announce something, the work didn't start there, the work started before, and you can probably guess that it started years before. It has always been that the case of setting up Scoots been a long-term strategic investment that we have made. Today, Vistara is a clearly appreciated in India as the best airlines in India. Those of you who have opportunity to take Vistara, you will know. And when all the approvals come through, we will eventually own 25.1% of Air India. Which you will know is an amalgamation of 4 airlines Air India, Air India Express, AirAsia India and Vistara. If you look at the Indian landscape today, nobody can deny it's growth potential. But of course, if you were to look at India 10 years ago, while there were growth potential, I don't think -- more than 10 years ago actually. I don't think people could quite guess that it will be as buoyant as today. Already the third biggest travel market in the world, going to be the third biggest economy within the decade. And how many foreign airlines are able to directly participate in this market. I think you can safely see that there are no other airlines who have quite the investments that we are making strategic investment that we're making and be able to benefit and participate directly in growth. We have also been growing our adjacent businesses. All of these businesses that we have grown over the years, and we have made new releases, explaining what they were before. So I won't go into detail, but I would like to highlight our FFP program. Significant growth even or despite COVID, 8.8 million members. I don't think you can find, well, any, at least not many airlines where the -- its FFP membership is bigger than the population of its home base. $1.2 billion from FFP program in terms of revenue, and we continue to look at how to expand Kris+ together the KrisFlyer program in the region. If you do not have a Kris+ account, please get one. It's beneficial. Sustainability, we take a leadership position in the region in terms of pushing for this. And as you know, we got AAPA, which is an association of Asia Pacific Airlines, together with fellow airlines in the membership to agree to a 5% target -- to reach 5% SAF by 2030. We also proactively work with our government to try to implement that over time. There are many things in sustainability that we are trying to explore. But this is SIA, I would only be able to tell you when we have greater certainty of what we want to achieve and how we can achieve it. [indiscernible] it is high up in agenda, not just with management, but also with the entire Board. We continue to want to contribute back to the community, some of the activities are listed here and we have just announced also the mention of the SIA foundation. Again, very soon, you'll hear more elaboration in more detail about what debt and dues and how do we target to make the foundation relevant for the community. We are strong and it's our strength. And since our first transformation, which is in 2016, 2017 to today, we're now widely recognized as a leading digital carrier. And in fact, many organizations beyond even airlines, making visits to see how we have achieved that. Certainly our people has been and will continue to be our biggest asset. During the COVID period, our people actually take greater sacrifices relative to many other of their peers. Everybody were willing to make those sacrifices together, so that we can retain the core operating resources for us to make those quick recovery first off the blocks. So I just want to reemphasize that the environment will always be having some challenges. Some of those I highlighted earlier. But for us, it also have a lot of opportunities because of the investments that we have made, not just over the last one year, two years, three years, as you can see, it's over the last decade, that we are seeing how it positions the group. Very differently from many other airlines to be able to tap and capture those growth that is not necessary available to many. And all these strategic investments on top of the strong foundations that we have, we are confident, I hope you are too, that will continue to be able to capture growth potential going forward. Thank you.

Thank you, Choon Phong. We will now move to the Q&A segment.

[Operator Instructions]. We will have the usual format for the questions and answers. We will -- we have about half-an-hour to 40 minutes still. [Operator Instructions]. Yes. So without further ado, could I invite Choon Phong as well as Jo-Ann Tan. They will be joined by Lee Lik Hsin, who's our Chief Commercial Officer, as well as Tan Kai Ping, who is our Chief Operations Officer. Who would like to ask the first question? Yes, Chuanren, please.

Chuanren from Air Transport World. Question -- sorry, two questions. First on the 777-9. Lufthansa has said that their delivery will slip to 2026. Are you seeing the same sentiment as them? And with that, are there any additional mitigation to your current fleet? And do you foresee that your new product for the 777-9 will be -- will lose its edge by the time the aircraft is delivered? That's my first question. Thank you.

At this point in time, based on our understanding, we are expecting the 777-9 to still be delivered next year. And on the questions on the products, yes, the 777-9 was meant to debut earlier, in fact, much earlier. Last year was when we were targeting to launch it. But you can be rest assured that while we have this delay, we have been making full use of the delay to ensure that any features that we had planned before continue to be updated.

Any mitigation to the current fleet?

Current Fleet because of the delay? We addressed that previously as well. We do have some flexibility with the 777-300ER in terms of our retention.

And second question on the SAF, 1,000 tonnes is actually very little. I think you can expand that in a few days, given your scale of operations. Could you explain that amount? And why not a bigger sum for your first purchase?

So as I mentioned earlier, we announced when we know -- we are quite sure what the expectations of productions and our expectations of take up is. So you can be assure that it will not stop there, but it has to be something that we have some certainty on, both volume and price.

[Operator Instructions]. Next question in the room. Angela from the Straits Times. If you can wait for the mic, please Angela.

Angela from The Straits Times. Just a simple question. Do you expect this 24% growth seen for FY '24 to be repeated, or is this a one-off? And how do you see the delays in the parts affecting your expansion plans?

Sorry. Could you repeat the part about the 24%?

Sorry. Your net profit growth this year -- last year.

So we have said that, and you can see from our figures that there is some decrease in the passenger yields that we have been experiencing over the last 6 months. The additional capacity that has been put into place by the other carriers, obviously, will put some downward pressure on us. But as mentioned by our CEO, we do believe that we're well positioned for the future. So that's in regard to our outlook. The second question was?

Spare parts.

So we are managing the situation. And in respect of all of the published schedules we have, we do expect to be able to operate all of those flights.

Thank you. Next question, please. Maybe I'll go to online questions then. We've got a question from Tabitha Foo from DBS. Any capacity guidance and recovery in China? Has it picked up in a meaningful way?

We don't give capacity guidance. But in relation to the recovery in China, I would perhaps add a bit of color. So travel into China has been strong. Travel out of China has not yet recovered fully to the pre-pandemic levels. But in recent months, of course, there has been the visa-free for Chinese to come to Singapore, and that has helped provide some lift to our load factors for our Chinese flights. So we are optimistic about our China routes.

Thank you. Just will be one more question. Lisa from [indiscernible] is asking, saying, group capacity versus pre-COVID levels has fallen since the start of the year. Can I ask why that is?

Maybe, I'll just take this question. It depends on how you compare. Really, the right comparison should be comparing corresponding month in 2019 with the latest performance. Initially, when we first started, the comparison has always been just to January of 2020. But of course, all of us know that there's seasonality and all those considerations. So the right -- the more appropriate comparison really is corresponding month between current and 2019. And if you were to do that, you will find that the January to March, which is a fourth quarter in our case of 2024, is actually comparable capacity-wise, to January to March of 2019. And if we just look at the first quarter of this financial year, which is the April to June quarter, relatives between the current 2024, April to June quarter, comparing April June quarter in 2019, you'll find that it is also very close. So in essence, we are really back to pre-COVID capacity.

Thank you Phong. Any questions from the room? Here, Tim, please, in the second row.

Hi, this is Tim Bacchus from Bloomberg Intelligence. I wanted to ask on the fuel hedging. I recall we talked about this at the last briefing, but, optically, it looks like the hedging profile is lower. So even -- I guess, the first half of this year, you take MOPS and the Brent, it's at mid-30%, but then second half is only 19%, something like that. It seems lower than previous hedging profile. Is SIA taking some kind of view on the market that perhaps feel would it go lower than there's no need to hedge? Or what can we read from that?

I'll take that. There is no change in our hedging. We continue to hedge on a declining wedge basis. So the numbers that you see here is as at March of 2024. So clearly, as the year progresses and the month progresses, we are taking more hedges. So there is no change.

Thank you. Right at the back there, please.

Hello, Mercedes from the Financial Times. I was just wondering, there's been a lot of demand for e-commerce out of China jumps. So a lot of the global airlines are rethinking their strategies in terms of airfreight routes and belly capacity deployments. Just wondering if you're doing anything to try to capture this as well?

Oh. Very much so. In fact, if you look at our partnership with DHL, where we have an operating agreement to bring 777 freighters into Singapore that is a sign of our commitment to growing the cargo market. Now while those are DHL freighters operated by us, they have good synergy with our own belly capacity as well as freighter capacity for transfer cargo flows in and out of Singapore.

Thank you, Lik Hsin. We've got a question from Perry Yeung from UBS. Can you comment on the lower ex-fuel unit cost quarter-on-quarter? And what drove the decline?

Thank you, Perry, for your question. I think we have spoken about this at previous analyst briefing as well. When you compare a quarter-on-quarter comparison, we have all sorts of timing difference. And we have actually previously guided that a year-on-year comparison is actually more, if you like, more representative. If you are talking about Q4 to Q3, there have been some movements in terms of when we do specific items, for example, aircraft maintenance, depends on when it's due. So a quarter-on-quarter comparison is not always the best measure of our costs.

Thank you, Jo-Ann. Do you have any questions in the room? I'll just take one more from here. We've got Divya from Morgan Stanley asking about the reasons behind the profit decline at Scoot year-on-year. The profitability -- for the profitability outlook for this segment, for Scoot.

So you know that Scoot's operations is largely regional. And the regional routes are the one that see greater injection of capacity. So therefore, you can expect that there is greater competitive pressure. And that contributes to what you see in Scoot's experience. We do not give profitability guidance.

Thank you. Any questions in the room? We'll go to Tim and then Angela again.

I was wondering about the associate contribution line, it looks stronger, specifically. Maybe what is driving some of the companies behind that is India starting to play a bigger role in that?

In the associate line, we do see improvement, in particular, Vistara is a fairly large contributor. They actually narrowed their losses this year.

Thank you. Maybe Angela again.

Can you share some of the ways that the group is looking to mitigate the higher cost from staff and some ground handling things like that?

So -- for Staff, if you recall in my presentation, other than the increases because of a headcount, which is associated with the increase in capacity. Year-on-year, we also had the increase because last year, we had some benefits from -- still had benefits from government-related grants, which is absent this year. That's one component. I think the second component, if you look at -- yes -- so with the staff as well, there is a -- you saw the increase primarily because we had a pretty large ramp up in the last year. And that's kind of reflected in the staff costs. In terms of the other cost elements, in particular, we talked about ground handling. We tend to go into very long-term contracts with our ground handlers. So at least this gives us some level of certainty when we lock in prices. So this helps us in a slightly more inflationary environment to lock down of our costs.

We've got a question from Danny Lee from Bloomberg, who's online. What's the -- Well, we've given the outlook for the aircraft delivery. He's asking really about the risk of delays on the 77-8 and other aircraft types like the Embraer or Airbus aircraft. And he is asking whether we have projected to be behind our delivery plan -- he's asking whether we are already behind the delivery plan based on what we've published?

What we have presented -- what Jo-Ann has presented earlier, is the schedule that we currently have with the OEMs. So if there are any change in schedules, we'll certainly reflect them.

Thank you. Ezien from OCBC is asking when will we complete the transaction for the merger of Air India and Vistara?

So it's pending some regulatory approvals. I think it was mentioned that one of them is FDI and all that. We will have to wait for the approval. Hopefully, we will hear something within the calendar year. But it is really a timing that is determined from the regulator's perspective.

Okay. And we've got Adrian Schofield from Aviation Week. Asking how much lower is your Chinese capacity now versus 2019? And are you -- are we going to see more connecting demand from North Asia to Mainland China, the traffic flows from North America to Mainland China sorry about that.

I don't have the exact figure on hand, so maybe you could respond to him. Yes, our capacity to China is still lower than pre-COVID. In relation to North America to China, that's not a traffic flow that we normally carry because we're not geographically positioned to be able to really carry that traffic flow.

He is just asking whether it can more, but yes that answers that. Yes, please in the first row here. this gentleman here besides Tim.

This is Roy from UOB Kay Hian. I have a question regarding your tax credit. And also noticed there has been a quite sizeable reversal of over provision from last year. And also, I noted that you have -- I recognize tax losses of over $300 million, which might be used for offset future tax expenses. So I wonder whether there will be more reversal of over provision of tax credit in the upcoming financial year?

Roy, I think your question around tax credit. Clearly, when we make provision for deferred tax, we are expecting to pay that presumably. So that's one we will have to see when the financial year comes, what the tax authorities say. I'm not sure -- can you repeat your other questions? You had a long line of questions before that? Okay.

Okay. That answers that. Mayuko, please.

Mayuko Tani from Nikkel. May I ask about China market. First, are you planning to launch the capacity this financial year? You have canceled some of the routes like Chongqing and Chengdu. What happened with those routes? And what was the reason of cancellation or suspension? And if you are looking at -- you said long term, you are optimistic. But is this financial year, will you be enhancing -- I mean strengthening the routes in the market?

So for the -- some of the China points, we had canceled some flights earlier. Because we could not secure regulatory approvals. We have since been able to secure regulatory approvals for those flights. So, Chongqing and Chengdu, they are all back available for sale. For some of them, they are only available for sale up to a certain point, July, I believe. And that's also because we managed to secure approvals only up to that point. But we are in constant contact with the authorities and working with the authorities. And as long as we can secure the approvals, we definitely want to operate to those points. We are progressively putting back overall capacity into China as well. Into both Shanghai, Beijing -- into Shanghai, Beijing and Guangzhou, we would be operating more capacity this year than last year.

Thank you, Lik Hsin. Peck Gek. I think you had a question?

Can I ask more than one question.

We have a few questions here. Maybe one and then I'll come back to you later. If you can...

Okay. Can I check with you. So what is the staff strength of SIA now? What is the percentage in the ramp-up over the last year.

Percentage ramp up over the last year?

What is the staff strength now?

I think you can see this in the press release, we have released our numbers. So as reported, we have 16,600 staff this year and it's an increase of 12.4%.

Thank you. We've got a few questions online. We've got Neil Glynn from Air control tower. He was asking about the SIA cargo yield and unit cost data suggests Cargo hasn't been profitable since Q1 of '23, '24. Is there a plan to address unit cost inflation or another strategy to restore pre-pandemic profitability?

We do not measure cargo profitability. We do not publish such numbers. It is part of that holistic business that we have, especially in the belly of the aircraft and in combination with our freighters. Now in relation to the cargo use falling yes, they have been falling, but they are still above the pre-COVID levels. And as a whole, we still believe cargo to be an important and strategic part of our business.

Thank you, Lik Hsin. We've got a question from Danny, basically asking about our partnerships. Asking about the update on ANA, where we are with the antitrust process and also on Garuda.

In progress. And if and when we get the approval, we will certainly announce it.

Thank you. So we'll go to Chuanren.

Slightly lighter note. How much of your Q4 results is result of Taylor Swift and Coplay in Singapore? And do you think that it's going to be a fluke event that your flights are filled out because of this sort of events?

Our objective is to fill our flights. Whether or not there's a Taylor Swift concert. And I would confidently say that had there not been one, we would still have been able to fill our flights.

We've got a question online from Perry. Asking about the dividend policy and is the payout ratio sustainable at 50% in FY '24, '25.

We have no dividend policy to announce.

Thank you. We probably have time for one or two more questions. So maybe Mercedes over there.

Just one more question. There's been some rating concerns around the Boeing 787, which Singapore has ordered. Are there any kind of particular concerns you have around this aircraft?

787.

What is the latter part of your question? Do we...?

Have any concerns about or particular concerns about this aircraft.

We and -- actually both SQ and TR are customers of the 787 planes. For the planes that we operate, we don't have any concerns about it's safe operations. I also want to maybe add a point about our relationship generally with OEMs. We adopt a very holistic relationship in that we work with them as a partner to look at how we can make products better and how we can ensure that we have a productive relationship in terms of supporting us. As feeding back on any issues that we find. So this kind of constructive relationship has make it better in terms of how we can also get support from the OEMs. So you -- I'm talking about this in general and not necessarily referring to boeing alone. And that's the reason why you find that's -- oftentimes the case when there are disruptions because of certain whether it is supply issues, spare part issues and all that. We are actually relatively less affected.

Okay. Wei Ting maybe the last one to have, please. Thank you.

Hi, Wei Ting from [indiscernible] here. So can I ask right now with the plans for SAF are still some time to go. But why you take the move now? Is it the first mover's advantage or disadvantage? And is there a long-term hedging plan for SAF? And I mean, yesterday, was the leadership renewal. So is there a renewal of leadership plans here?

That are about 3 questions in 1.

The last question you asked is beyond my pay scale. You have to ask the board. But on SAF, quite frankly, we do not look at it as a competitive thing. It is really an industry problem. No airline can solve this issue alone. It's just too big. We are talking about being able for the aviation industry to reach net zero by 2050. And I would say that almost all airlines have committed to that. But then SAF must be a very integral part of their solutions in order for that target to be reached by 2050. So the airlines have to work together to convince the producers of SAF, firstly, to be able to source for the acceptable feedstock and to make sure that there is enough supply in order to produce sufficient SAF for demand by the industry as a whole. Plus, it has to be at a level -- at a price level that is susceptible. Currently, it's 3x to 5x, 3x to 5x of conventional Jet Fuel. That level of costs, I think you can look for yourself. At this point in time, even with the current fuel price, it is almost 1/3 of our total expenditure, 3x to 5x. It cannot be the long-term solution. So it is something that I truly believe, the industry as a whole has to come together and resolve it. And I don't view it as really a competitive issue.

Great. Thank you. All right, maybe one last question, then we really would have to stop.

Roy, again from UOB Kay. Okay. My question is regarding the cargo yield outlook. So -- okay, in the last few weeks or last one, two months, the ocean freight has actually surged a lot. And apparently, the airlines have benefited from the cargo diversion from ocean to the air. My question is for the Air freight rates here in Singapore. Do we see in the last few weeks -- or in the first -- into the first quarter of FY '25, did we see the cargo yield has improved versus the fourth quarter of last year.

So there was some flow of cargo from sea to air rising from the Red Sea issues. And we were there to capitalize on it. We had some improvement in our load sector. Now as to rates, I think it's a function of demand and supply. And we -- all we will say is that we want to remain nimble and to be able to capture market share. We don't give any information on figures not published, so I can't talk about the first quarter.

Okay. Thank you. Thank you, everyone. That comes to the end of this session. Thank you for your time, and we will see you again in November. Have a good day and a good week, everyone. Thank you.