Singapore Airlines Limited (C6L) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to the Singapore Airlines Full Year Media and Analyst Briefing for Financial Year 2024, 2025. My name is Siva, and I'm from the Singapore Airlines Public Affairs team. We're very happy to welcome everyone again to the SIA Training Centre for this session. And also to everyone joining us virtually, welcome again. We will follow the usual format as per every year. We will first invite Jo-Ann Tan, who is the Chief Financial Officer, to present the results. That will be followed by Goh Choon Phong, the Chief Executive Officer, to present the outlook and the strategy for the group. We will then follow up with a Q&A session. For those who are joining us virtually, you will have the key in your questions, and we will take them when we start the Q&A. [Operator Instructions]. So without further ado, I'd like to invite Jo-Ann, please. Thank you.

Good morning, everyone. Okay. Let me start with the key highlights for this year 2024-'25 results. As you've already read, our operating profit for the year stands at $1.7 billion, a 37.3% lower than last year. However, the group achieved a record revenue of $19.5 billion. This is $527 million higher than last year and driven by very resilient demand for both air travel and cargo uplifts. Combined SIA and Scoot carried a record 39.4 million passengers. This is an increase of 8.1% versus last year. Group expense rose $1.5 billion to $17.8 billion for the year. Nonfuel expenditure was up $1.2 billion, driven by the 8.9% capacity growth and cost escalation, partially mitigated by the group's cost management measures. Net fuel costs increased by $309 million as the impact of the increase in volume uplifted was partially offset by an 8.5% reduction in fuel price. For the financial year, SIA achieved a record net profit of $2.8 billion. This was very much boosted by the one-off noncash accounting gain of $1.1 billion from the Air India-Vistara merger that was completed in November of 2024. The proposed final dividend is $0.30 per share for this FY, including the interim dividend of $0.10 that was already paid out in December. Total dividend for '24-'25 comes in at $0.40 per share. This is going to be subject to shareholder approval at the upcoming AGM in July of this year. Attached here is a summary of the operating performance of the main group companies. For both the full service and low cost, we saw weaker year-on-year performance in both the second half and the full year. I'll elaborate more on that later. SIAEC, on the other hand, delivered an improvement in the operating performance, and this is because their revenue gain from higher maintenance activities with more flight resumptions primarily exceeded their cost increases. Now moving on to the group. For the second half of the year, both passenger and cargo continued with the capacity growth trajectory. On a full year basis, overall capacity is up 8.9%. Pax capacity increased 8.2% and cargo came in higher at 10.1%. Our group financial results. Let me first spend some time on the second half year-on-year. Revenue for the second half grew $192 million. It's a 2% increase, hitting $10 billion revenue mark for the 6-month period. For perspective, this is actually our highest half yearly revenue. Total expense also grew about $452 million. This was driven by increased nonfuel expense of $590 million, partially offset by lower net fuel costs of $138 million because of lower fuel prices. Consequently, putting it all together, second half operating profit came in $260 million lower at $914 million, a 22% reduction from the same period last year. For the full year, as I had already shared in the first slide, the group achieved record high revenue of $19.5 billion, a $527 million increase from the previous year. This was, however, offset by a higher expense increase of $1.5 billion year-on-year. Consequently, the lower operating profit of $1.7 billion is a $1 billion reduction from last year. The full net -- record net profit of $2.8 billion, which is $103 million increase from last year was really very much boosted by the one-off noncash accounting gain from the Air India and Vistara merger. Looking at revenue. The group's record revenue of $527 million was contributed by increase from both the passenger revenue as well as cargo. For passenger, passenger traffic remained very robust and resilient for the full year and traffic grew 6.4%, just slightly lower than the capacity expansion of 8.2%. The SIA Group Airlines achieved overall load factor of 86.6% with the full-service PLF coming in at 86.1% and the LCC load factor coming in at 88.4%. A little bit more on yields. For both FSC and LCC, yields continued to see a gradual downgrade -- downward trend due to the increase in competition. For the full-service carrier, first half, the yield decrease was 7.4%. Second half yield decline actually narrowed to minus 5.7% instead. So for the full year, the yield decline came in at 5.8%. Similar story for LCC. First half yield decline was 4.5%. Second half yield decline narrowed to 1.4%. Full year yield decline was 2.9%. I think just to highlight also for both carriers, notwithstanding the yield decline, the yields continue to remain stronger than our pre-COVID levels. Cargo had a very robust year. Uplift grew 13.3%, higher than the capacity increase of 10.1%. And this was because of the benefits from the disruptions in sea freight as well as stronger demand for e-commerce and verticals such as aerospace and perishables. Consequently, cargo load factor actually improved 1.6 percentage points in '24, '25. And a similar situation, cargo yields continue to be at levels above pre-COVID. Now moving on to expenditure. Expenditure of $1.5 billion increase from last year. I think it's probably best viewed from our pie chart. I will cover the net fuel costs later. So focusing on the nonfuel expense first, which saw an increase of $1.2 billion year-on-year. A couple of callouts here. Staff costs increased 6%, but this was really due to the increase in staff strength in support of the expansion of operations. Aircraft depreciation and leased aircraft charges went up 11%, and this is because we had additional heavy maintenance and engine overhaul jobs as well as the delivery of new aircraft, 10 777 -- 10 787s, 3 A350s and 5 E2s for Scoot. Handling charges and passenger costs went up 16.3% and 19.3%, respectively. This is from a combination of higher capacity, higher passenger carriage as well as some rate increase and improvements that we've made in our in-flight meals. AMO costs showed a decrease of 11.5%, and this is largely because we had a write-back of provisions for aircraft return costs from the early termination of 2 A380 leases, which we converted them into owned aircraft. Excluding these amounts, AMO costs would also have gone up in line with our increase in flight operations. Now moving to net fuel. Fuel cost for the full year was up 6%, $309 million. It was higher because of increase in volume uplift, lower hedging gain compared to last year, but very much offset by lower fuel prices before hedging and the weakening of U.S. dollar against Sing dollar. The table underneath shows you the fuel price before hedging and after hedging. For this FY full year before hedging, fuel prices were 8.5% lower compared to last year. In terms of our fuel hedging status, we continue to hedge our fuel requirements on the declining hedge basis into the next year. In the nearest quarter, we typically hedge up to about 50%, as you can see. In addition, this year, we have also extended our hedge profile by taking more opportunistic long-term hedges up to 5 years out. And the table here summarizes our fuel hedging position with average hedge prices as at 1st of May of this year. Now putting all of this together, second half operating profit came in at $914 million, 22% lower than last year. First half operating profit was $796 million. Combined, it forms an operating profit for the full year at $1.7 billion, a 37.3% reduction from last year. This is the usual waterfall chart that gives you a better picture of how things move. The resilient demand drove higher passenger and cargo revenue, albeit we recognize with the yield declines, the revenue growth was more subdued versus capacity. Cost increase in both fuel and nonfuel components outweighed the improvements in revenue, leading to the operating profit decline compared to last year. Now although we note the decline in operating profit, I think for perspective, the comparison '23-'24 was really the operating performance that benefited from very robust post-COVID growth. When we look at the '24-'25 operating profit levels at $1.7 billion and operating margin of 8.7%, I think we still think it reflects a very strong operating performance, especially when we think about the -- when viewed against the average pre-COVID year's performance. So on a full year basis, the group achieved a record net profit of $2.8 billion, $103 million higher than last year. And this chart here very clearly shows that very much boosted by the one-off noncash accounting gain of $1.1 billion from the Air India-Vistara merger. Now excluding this accounting gain, the net profit would have stood at $1.7 billion. This shows our group financial position. Just as a call out, our group cash position, I think we need to look at it from the perspective of total cash as well as fixed deposits with tenures longer than 12 months. You'll see that our cash position is still very strong and healthy. And also as a recap previously, during COVID, SIA issued MCBs, which are treated as equity. We already did the full redemption of the last batch of MCBs in June of 2024, and this resulted in a reset of equity levels post MCB redemption. And you see this in the update in our equity line. Moving on to the group financials. We are just also showcasing our basic earnings per share as well as EBITDA margins. For this year, the Board has proposed a final dividend payout of $0.30 per share, including the interim dividend of $0.10 per share that was already paid in December 2024. Total dividend for '24/'25 will come in at $0.40 per share, representing a total dividend distribution of $1.2 billion for the full year. This is going to be subject to shareholder approval at the AGM on the 28th of July of this year. And the final dividend will be paid on the 27th of August for shareholders that are registered as at 11th of August. For '25/'26, the group is expecting 22 new aircraft deliveries and 9 retirements. Consequently, operating fleet, we are expecting to expand by 13 aircraft to 218 units by the end of the financial year. And this is my last slide that summarizes our 5-year projected CapEx. This has been updated based on revised aircraft delivery schedules, okay? Just for perspective, we still have another 78 aircraft to be delivered within this time frame. So annual CapEx expense, including aircraft purchase, continues to remain in the $4 billion per annum territory. So on this, let me hand over to CEO for the next presentation. Thank you.

Thank you, Jo-Ann, and ladies and gentlemen, once again, welcome to our training center. I would like to touch, as usual, on 2 aspects, the challenges as well as how we are positioned to handle the challenges. This slide should not be new to anyone because the challenges -- the key challenges for the industry remain pretty much the same as last year. And I don't -- all of you should be very familiar with them. But on top of that, of course, we are aware of the more recent development emanating largely from the U.S. as a result of tariff. But before I go further, I think it's important for us to bear in mind that these are not just SIA issues to handle. These are actually issues that the entire airline industry has to handle. And I'm going to show how SIA is very well positioned to handle not -- actually not just handle these challenges, but also in a position to seize any opportunities that may arise as a result. There are foundations that we have built over the decades that will position us well, and I'll go through them each in turn in the following slides. But beyond the foundations, there are also strategies that we have adopted that would allow us to be agile and resilient and in position to take advantage of any opportunities. First, of course, is our financial strength. Jo-Ann has pointed out earlier, just in terms of cash, and of course, in this case, we include our long-term deposit, the FDs that Jo-Ann was talking about, we have in excess of $10 billion, and we have $3.3 billion of committed lines that has not been drawn, plus we have also headroom for borrowings. So it's quite clear that we have one of the strongest, if not the strongest balance sheet in the airline industry, and this will allow us to withstand any shock that may come. As far as we can tell, the issues associated with the tariff changes and so forth are not likely to deliver a shock quite the same as COVID. But it does mean that it will be a lot more uncertain. Nobody quite knows how exactly things will unfold because policies change quite often. And as a result, what is very important is for the organizations to be resilient, to be agile so that they can take advantage and to be able to withstand any challenges that may come. So certainly, with a strong financial strength, this is a clear advantage in this time of uncertainties. The other foundation is our digital capabilities. Since the last IT or digital transformation that we embarked on about a decade ago, we have made digital capabilities a core foundation for SIA. And this slide should be quite familiar with all of you because we presented them before, how we have built up our digital capabilities to be recognized as a leading digital airline in the world today. But more than that, with the strong foundation in digital capabilities that we have built, it actually enabled us to transition into the adoption to the use and adoption of Gen AI in a smooth manner. In fact, today, we have already more than 270 use cases in Gen AI and 70 -- more than 70 of them have been completed. So in production, we are actively using them for various applications in customer service, in improving our productivity, in enhancing our operational efficiency. So here are some of the examples. Again, I have spoken about them before, some of them, but we are seeing clear delivery of benefits. And in this particular case, we do believe that the Gen AI adoptions as an early adopter will give us competitive advantage and it will be a game changer. The third foundation is our people. And this, again, should come as no surprise to everyone. We have very enterprising people who are very dedicated, talented, and we want to continue to be able to provide the necessary training so that they are able to contribute in an effective manner even though the environment has been changing. Now beyond these 3 foundations, I mentioned that there are long-term strategies we have adopted that also put us in a strong position. One of them is a diversified network that we have maintained all this while. You can see that we have a strong network across the world. But looking at this network, it is also good to point out that where we are positioned, where we are situated, which is Asia and Southeast Asia, in particular, is actually the epicenter of growth, we believe to be the epicenter of growth in the decades to come. So if you look at our frequency in terms of weekly frequency, you can see that a huge part of the network is actually serving, of course, Southeast Asia and also Asia at large. This is where the growth is going to -- is expected to be in the next decade or so. This is the full-service carrier network. But because of the portfolio strategy that we have adopted, we have actually have introduced goods about more than 10 years ago. And then the networks could help to complement the network that SIA have, in particular, densify the network that we have in Asia. In fact, this is what it looks like if you include Scoot. So overall network in terms of frequency per week, actually would have gone up by almost 50%. And if you look at Asia itself, that growth is even more impressive. In fact, Southeast Asia is up almost 40% with the Scoot. So you can see how the adoption of the portfolio strategy, which is Scoot, both the LCC and the full service, allow the airline to actually be able to serve a larger -- with larger density to Asia. And also because these are 2 different models, it also gives us the flexibility of ensuring that we are always able to deploy the right vehicle on the right route depending on the demand patterns. The other strategy that we have adopted and been building over the years is partnership. Now in the time of difficulties, challenges and uncertainties, being able to work with a partner and combining strength is an advantage. And we have built out partnership and strengthen our partnership across the world. In particular, we have established very strong commercial partnership with the following airlines you see on the map. And you can see that it actually span the world as well in key markets that we are present in, whether it's Europe, North Asia, ANA was the latest that we announced. And of course, on top of that, you are well aware of our investment in India, which arguably today is considered one of the highest growth, if not the highest growth aviation market in the world. So our multi-hub strategy, which involves our investment in Air India, also come in very helpful in times of uncertainties when we can participate directly in a high-growth country. Then there is this consistent emphasis on cost management. Yes, we provide the best service. We provide leading-edge products, and we continue to grow our fleet in order to serve our customers better. But at the same time, we are relentless in ensuring that we continue to be efficient. And with the adoption of Gen AI, we believe we can do even more. You can see that over the years, despite challenges on costs, escalations, inflation and all that, we have managed to consistently manage the RASK -- not RASK, CASK, which is the cost per ASK, the unit cost quite well. It is fairly flat if you look across 2 years. This, again, is not a new slide, but it's important to call out because the belief is that the tariff could complicate the supply chain even further, but we are well placed. Supply chain issues, supply chain disruptions are not new. In fact, it happened -- it was already quite bad last year. And despite that, we managed to actually achieve a very good growth, meaning that we are still able to ensure that our planes are deployed gainfully to provide the capacity that we need. We will continue to ensure that we deliver besides the network, also products and services. We have announced all that, including the launch or the renovation of the Terminal 2 lounge, which will have amenities that will rival that of the one that we introduced in T3. On top of that, we have also announced this huge retrofit exercise that we're going to have with the 41 A350 long-haul planes and ultra-long-range planes. I'm glad to share that we will actually be sharing the exact products and unveiling them to the public in the first half of next year. Our KrisFlyer numbers continue to increase. This is a deliberate effort for us to reach out and ensure that we can continue to be relevant to our customers, increasing the customer base. I think it's no mean feat to have a number that exceeds the population of a country where we are based. And this increase means that we have more opportunities to reach out to our customers base and to be able to provide other services and sales opportunities. We are committed to sustainability. However, we do believe that it is not an SIA issue. It is an industry issue. We don't look at it as a competitive tool. We look at it as something that the industry as a whole should achieve. And because of that, we have deliberately taken a leadership position in the initiatives associated with sustainability so that we can encourage other colleagues and other airlines to come along just as we did when we work with AAPA to introduce a target for SAF uplift by 2030 of 5% for the AAPA carriers. We are also very serious about contributing back to the community we serve. So as you know, in 2023, we raised funds for the less privileged part of our society -- segment of our society. And we also have a foundation that will reach out to youth and get them more interested in the aviation industry. So this year, as part of the SG60, we're glad to have been able to provide opportunities for our customers to have lower fare travels as part of the SG60 promotions and also to have SG60 theme products for our customers to enjoy. But also importantly, to have another fundraising campaign, this time around, we hope to raise 2.1 -- sorry, $1.3 million internally within SIA and with our partners and also all of you are also welcome to contribute. The QR code is there. With that, SIA, the airline will match 1 for 1. So we hope to then raise $2.6 million and the government will match that. So it's $5.2 billion. So for every dollar that you put in, you'll be $4 benefit to charity. So it's a wonderful thing to do. Let me summarize again to show you why we should be confident in some sense of being able to manage the uncertainties and the challenges that we see unfolding in the world. We have the strong 3 foundations, which I've explained, and we have all the strategic initiatives that has been put in place. It is important to note that all these were not done because of our desire to handle the existing challenges. All these were done as part of our overall strategies and foundation building for the future of the airlines. Thank you.

Thank you, Choon Phong. So while we get ready for the Q&A session, maybe I could remind the folks who are online, you can key in your questions in there, and we'll get to in a short while. Maybe I'll just go through the quick ground rules again. [Operator Instructions]. We have just over half an hour or so for the Q&A. [Operator Instructions]. Could I invite Choon Phong and Jo-Ann back up on stage again. Could I also invite Lee Lik Hsin, our Chief Commercial Officer; Tan Kai Ping, our Chief Operations Officer; as well as Leslie, who's the CEO of Scoot.

Thank you. So we'll now start and we'll start with Danny from Bloomberg. Please wait for the mic.

Can you just give a little bit more color around the caution you see on the outlook with regards to tariffs? And is there anything in the business -- the numbers that you see that gives caution around the revenue being weaker than expected in terms of forward bookings and trends around that?

So at this point in time, based on what we can see in the bookings, we do not see any significant impact, any material impact. So we are still seeing robust demand on our routes. And as to what is -- what can we expect from all this tariff impact, as I mentioned in my presentation, it is really very uncertain. I don't think anybody could tell you exactly what will happen because it depends on -- well, one particular person in particular. But I would say that what is very important is to see whether we are -- we have the nimbleness, the agility and is prepared to manage the uncertainties. And I believe what I've shown in my presentation is exactly that, that we are ready.

Thank you, Choon Phong. Just the lady there in the third row.

Tabitha from DBS. I have a first question on Scoot aircraft deliveries. You noticed that Scoot is taking quite a few more aircraft than SIA this year. So what's the thinking behind that? And where are these aircraft likely to be deployed? Does this reflect a more upbeat view on the low-cost segment for the year?

Yes. I think you're right to say that we are taking quite a number of deliveries. I think, first of all, the reason is because of COVID where some of the aircraft has been delayed to post-COVID. And if you recall, 2 years back, we have decided that we are introducing a new fleet into the company, the Embraer. So last year, we have taken 5. There's another 4 joining us this year. So altogether, there will be quite a number of new aircraft joining us. But if you recall what Jo-Ann showed in the slide as well, we are also in the phase of retiring the older 320. So this year, we'll be retiring another 5. So there will be an addition of new aircraft at the same time, retiring of older aircraft. And if you look at Scoot Network, our focus is really on Southeast Asia as well as Asia, which Choon Phong also alluded to say that there are a lot of opportunity because this is the epic center for growth going forward. So most of the aircraft that we are taking in, including the Boeing 787 will be deployed within Asia itself for this financial year.

Thank you, Leslie. We have an online question. Lisa Barrington from Reuters, who's asking, are you seeing a rebound in cargo demand and on which lanes and products since Monday's U.S.-China tariff deal? And a similar question from Chuanren. Has the group seen an increased cargo demand and movement to circumvent tariffs? How and where do you see cargo demand shifting moving forward?

Suffice to say, it is changing very constantly. But the point that we have made, that Choon Phong has made is that we are well diversified. And so wherever the cargo flows go, we have the network to be able to manage that. So for example, in the days when immediately after the implementation of the U.S. tariff on China, very clearly, it was well reported in the media that shipping and air cargo dropped quite significantly. We were able to fill our Singapore-U.S.A. flights with cargoes from Southeast Asia rather than from China, where it was more greatly impacted. So regardless of how the flows go, we will be able to manage it and tap into the new flows because we do believe that flows will continue globally.

One more virtual question then. Any concerns and impact on SAS and Asiana leaving Star Alliance? This is from Chuanren as well. Any -- how do we view the impact of Asiana and SAS leaving the Star Alliance?

At the moment, we, of course, had cooperation with both Asiana and SAS before, more so with SAS, I would say. At the moment, the arrangement will continue. Of course, what happened in the future, we'll have to see.

Okay. Any questions in the room? Mayuko, right here in the second row, please. Thank you.

Mayuko from Nikkei. About the passenger yield, it has come down on the full-service airlines more, it seems. Can you explain a little bit more about which area, which routes are impacted more, which classes? And if it's still higher than pre-COVID level, but are you prepared to see the pre-COVID, it will go down further? And if I can, can I know whether you -- Scoot is considering to order additional Embraer planes?

So on passenger yield, we don't give detail on different routes. And so I wouldn't address that point. But in general, I would say that the passenger yield, of course, is still moderating, but that moderation, of course, is coming down. So the decline against the previous year is less than in the earlier months.

On aircraft order, we never announced any aircraft order until it's confirmed. So you're here if we have something.

Thank you. Any other questions from the room? All right. So we'll go to the gentleman on the far corner there, followed by...

Kaseedit from Citi. Just on premiumization mix of passengers, right? I understand that we have been seeing a higher mix of premium cabin since reopening. But let's say, after April on heightened tariff risk, are you seeing any changes in mix of premium cabin, i.e., passenger moving back to the back cabin, for example?

Actually, the mix of premium passengers on our flights has been relatively stable. So it moves up a little bit in the initial post-COVID rebound travel, but we are only talking about between 1 to 2 percentage points. And in relation to post the tariff turbulence, as Choon Phong has said, at this point in time, we're not seeing big shifts, so I would say that nothing -- no big shift even in the mix for now.

Thank you. And we get the mic to maybe the lady and the gentleman, please.

I'm [ Kate ] from CNA. I just want to check on any new routes or markets you guys are expanding into and also quickly clarify on how many months of bonus are you guys giving the employees? And one last question on -- I understand that you guys are saying that low fares are hurting the profit. So can SIA realistically maintain its premium pricing given that a lot of the low-cost carriers are actually expanding very aggressively.

I'll take the easy question. So I can confirm with you that we have announced a bonus payment for our employees, and it will amount to 7.45 months.

So we believe that there will always be a market for premium travel, and there will obviously also be a market for budget travel, and that's why we have this portfolio strategy of both having Scoot and Singapore Airlines. So we do not believe that there will be -- of course, generally, pricing is a function of demand and supply, and we will be nimble and adjust to the market as needed.

What about any new routes or markets that you guys are looking to expand into?

We will normally announce them when we are ready to announce that.

[ Roy from UB ] here. I have three questions. First, could you please comment on the yield outlook for both passenger and cargo for FY '26? So for passengers, we know the moderation is slowing, but for 2026 -- FY '26, do we still expect some further moderation in the passenger yield? And also, I would like to hear your comment on the cargo yield. Second question is regarding if you can share some update on the visibility of the Air India turnaround because FY '26, we will see the full year impact from Air India. So I wonder whether there will be some drag on SIA's earnings performance. The third question is for Jo-Ann is regarding the rise in nonfuel cost. I see a lot of increase in the other operating expenses. If we see the second half alone, the year-on-year increase for other operating expenses for second half is, I think, over 50%. And I know -- I noted that there are some accounting loss like the lease remeasurement. There is also some ForEx losses. But even if we exclude those I see one-off losses, the operating expenses still rise about 40% year-on-year for the second half of the year. So I wonder whether there is some other one-off losses there we missed out? Yes, that's the 3 questions.

Okay. I will take your middle questions, and I'll ask Lik Hsin to address your yield question and Jo-Ann, your last question. So Air India, outlook for Air India, we don't even give guidance for our own airlines, and we're certainly not at liberty to share with you what Air India's projections might be. I suggest you ask them, are you going to the IATA meeting? Are you going to the IATA AGM? Oh, no. Okay. Maybe your colleagues can ask on your behalf.

I also have the one-line answer. We do not give guidance on forward uses for both passenger and cargo.

Okay. So for others, I think you've already captured. We did have some ForEx losses. We've also made some provision for emission cost charges. So there's a combination of a few things under others as the headline would suggest.

So if we exclude all the one-off losses or accounting losses, would the other operating expenses more or less, I would say, stable year-on-year?

I don't think we would give specifics to that level.

Thank you. We'll take some online questions. Firstly, from Adrian Schofield from Aviation Week. Could you give more details about the extent of AOGs in the group fleets due to supply chain constraints? And do you see improvements on the horizon? Also, what level of delivery delays are you seeing?

Thanks for the question. So supply chain challenges are not new. So post-COVID, we have seen them. And certainly, Singapore and [ ICE ] is also affected. I would just say that on outcomes, we are managing it relatively okay. You see in the capacity materialization. So notwithstanding the very difficult supply chain challenges being faced by the industry, we have delivered 8-plus percent ASK and overall around 9%. So we have always treated our OEM partners as partners. We work together. So in difficult times like the current challenging operating conditions, we are very working very closely with them to deal with the reality of the operation to try and support each other to really deliver the kind of reliability as best as we can. So the proof is in the pudding, as you will say, and we have delivered very robust ASK materialization. So this is work in progress. Challenge continues.

Thank you, Kai Ping. We'll take one or two more from the online crowd. We've got Shukor from Endau Analytics. He's asking, how do you view the flurry of Boeing orders announced during Trump's Gulf tour this week? And will this push airlines like Qatar Airways, give them a competitive edge going forward?

Well, Shukor should probably know that we don't comment on other people's orders or business.

Thank you. We've got Perry Yeung from UBS asking, in terms of costs, are we still comfortable to expect relatively flat and steady unit cost despite the continuous cost inflation pressure and ongoing supply chain issues?

So I think we talked about cost management and Choon Phong covered this. Even for this year, notwithstanding all the cost management measures, we do see a slight increase in our unit costs. So it's really a function of, yes, what the external environment is. But I would say that we have very strong cost management measures to try and contain this to the extent that we can.

Thank you. Questions in the room. We'll maybe go to Peck Gek and then the gentleman here.

Can I know why is SIA hedging its fuel 5 years out? I think in the past few years, it has been like 2 years maximum?

So as I mentioned at the start, it is actually very opportunistic based on pricing. So for the last 2 years, we have, in fact, been -- we haven't done this. But if you recall, before COVID, we did have a 5-year sort of a hedging program. And again, that was also to capture fuel hedges when pricing was looked attractive. So it's the same rationale.

Thank you. And the gentleman here, please.

[ Sebastian ] from Nikkei. My question is on the recent announcement of the T5 groundbreaking. You commented how you see future room for growth and operational synergies by moving all your operation out of the new terminal. I know it's still ahead, but I'd like to hear a bit more how significant this is compared to your current operation using all the other terminals.

Certainly, if we are able to consolidate all of Scoot and SIA's operation under one roof, we will be able to look at how to improve the seamlessness of travel for our customers. As you know, Singapore and SQ is working really also as a hub, not just OD to facilitate a transfer of passengers from different parts of network onward to other parts of our network. So having it in one location, having the transfer done, all that done in one location, you can imagine that we can do a lot more in ensuring that there's a consistency in the service level and experience.

Thank you, Choon Phong. We'll go virtual again. Brendan Sobie from Sobie Aviation. He's got two questions related to growth. The fleet is growing by 6% in the current FY. What kind of ASK growth are you expecting this year? And over the longer term, now that the group is above pre-COVID levels with about 40 million pax annually, what kind of long-term growth are you expecting? Do you expect it to average around 5%, especially given Scoot's regional opportunities?

Okay. So the answer is that we will only announce when the time comes about what our expected growth for the year will be and certainly not what our long-term growth is going to be. So we will announce it only when we think we're ready to do so.

Okay. Great. Thank you. I'll just take one more virtually. This is from Chuanren again. It's -- we've said before that there are numerous levers to overcome aircraft delays. And now that the 350 is delayed and the deliveries for the 777-9 are still unclear, what -- how many levers do we have? And what are these levers? And what are the -- how are we mitigating these issues? And related to that, how are the older 777-300ERs performing?

So all the planes, obviously, that we have put in operations are certainly performing as per expectation. Otherwise, we wouldn't be putting them into operation. We said we have multiple levers. Some of them are probably familiar with the audience here. I mean we have leased aircraft that we can extend the lease for. We have aircraft that we own that we can extend the operation of. And those 2 already would have provided quite a bit of flexibility for us to adjust our capacity accordingly.

Thank you. We'll take another online question from [ Wei Ting from Tao Bao ]. Are there any hedging mechanisms for sustainable aviation fuels between SIA and producers? And what kind of impact will SAF costs have on the SIA balance sheet?

Well, if our colleague who -- Wei Ting, is Wei Ting is aware of any good hedging tool for sustainable aviation fuel would be -- we would love to hear from her.

She just asked about the impact of SAF costs on balance sheet going forward.

Not material at this point in time.

Thank you. Tom Ballantyne from Orion Aviation, he's asked, there are several reports of a significant drop in inbound tourism traffic to the U.S. because of aspects of President Trump's policies. Has SIA seen any sign of changes in traffic between Asia and the U.S.?

So simple, quick answer, no. We have seen demand from the parts of the world that we go to, bringing passengers to the U.S. hold up very well. So from Asia to the U.S., no drop.

Okay. Any questions from the room? Peck Gek, right here, please. We'll go to [ Louis ] from [ Tao Bao ] after that.

I have two questions. The first is I noted that the operating profit -- the group operating profit for Q4 was only about 50% -- it was 50% lower than a year ago. The second question is, have all the markets, including the Chinese market recovered to the pre-pandemic levels?

That is correct. So the question was whether there was any reason for the Q4 performance. The drivers really, we talked about the improvement in revenue being outweighed by increases in costs applies across the different quarters. So no, there's no material difference in any of these between the different -- whether you look at quarter 4 or the full year.

One more. So when you say China market, outbound travel from China has not yet recovered to the pre-pandemic levels. But we have seen quite a surge in inbound travel into China in the last months or so, and that has allowed us to improve our load factors on our China flights. So our China flights last year were only registering load factors in the 70s, but this year, we have managed to push them up into the 80s. So it is improving from a route perspective.

[ Louis from Tao Bao ]. Just to follow up, is the capacity in China recovered to pre-COVID level? This is my first question. Second question is on bonus, congratulations to all SAF staff for another more than 7 months of bonus. Going forward, given the situation you just described, do you have any guidance on bonus expectations? Sorry, another question. SIA and ANA will commence revenue sharing flights between Japan and Singapore from September, it's already on sales. How are the sales so far?

So capacity to China for SIA has largely recovered back to the pre-COVID levels since we've been able to get back -- we have been able to operate regular flights to some of the secondary cities as Xiamen, Chengdu, Chongqing and Shenzhen. And then capacity to the main cities of Beijing, Shanghai and Guangzhou are back to their pre-COVID levels.

As far as Scoot is concerned, China is quite a very important market for us. At this moment, we have recovered up to about 80% of pre-COVID capacity. If you recall, we have also announced that we have actually suspended 3 Chinese destinations. But at the same time, we added Shantou. So for Scoot, we're operating to 15 cities in Mainland China.

And no, no guidance on bonus.

ANA as well, there's a question on how A&A sales -- the joint venture sales?

Well, it's still very early days, but we certainly do believe that it will result in both benefits for the customer where they have much more choice and availability of services.

Danny from Bloomberg, and then maybe we'll take one or two more questions, and we'll end there.

Is there any kind of missing parts of the world where you feel you are still targeting joint ventures or are interested in partnering with other airlines?

Sorry, you're saying?

Is there any parts of the world geographically where you still feel you are missing joint ventures or are interested in pursuing?

All discussions that we have with our partners are confidential. So we will only announce when we are ready to do so. Thank you.

Okay. Well, we've got one more online question from Shukor again. There's a new Prime Minister, new cabinet lineup in Singapore. Congrats to Choon Phong on being the longest and possibly most successful SIA CEO in its history so far. Is the succession being planned? Or do you not give guidance on that?

Very good question. He has to pose it to my Board.

Thank you. And I think we might end on that note. Thank you, everyone. Thank you for being here for our full year media and analyst briefing. Have a good day and a good week. Thank you.