Singapore Airlines Limited (C6L) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to the Singapore Airlines Training Center. My name is Siva, and I'm from the Singapore Airlines Public Affairs team. Welcome to our half year media and analyst briefing. Before I start, if I could ask everyone to please put your mobile phones to silent or switch them off, please. As usual, we have media and analysts here in person as well as those who have dialed in online. If you're online, you would know you would have an option to ask the questions, and we will take them once the briefing is over. We'll follow the usual format. We'll have the presentations by our CFO and CEO, followed by a Q&A session. So without any further ado, could I please invite Jo-Ann, Chief Financial Officer, to deliver the results. Jo-Ann?

Okay. Good morning, everyone. Thank you for coming to our analyst and media briefing. So let me begin. Firstly, with just highlighting some of the key findings from our first half. I think starting off, the SIA Group, we demonstrated strong first half operating profit of $803 million. This is a 0.9% higher an improvement versus last year. Group revenue at -- sorry, at $9.67 billion is actually a first half record. Air travel demand for the first half remained strong, leading to passenger traffic growth of 4.6%. This is actually higher than capacity increase. Yields declined 2.9% because of increased competition. On expenses, it rose 2%, contributed by the increase in nonfuel costs from a combination of capacity expansion and inflationary pressure, partially offset by lower net fuel. On the net profit front, net profit was $238.5 million, 67.9% lower than a year ago. Now the decrease is mainly due to 2 factors: a swing from net interest income last year to net interest expense this year as well as our share of losses of associated companies, notably from Air India. Just for information and reminder, equity accounting for Air India only started in December of 2024. Company is also proposing a capital return plan, comprising a special dividend of $0.10 per share to be paid annually over 3 financial years. And for the first half, the Board has declared an interim dividend of $0.05 per share and interim special dividend of $0.03 per share to be paid on the 23rd of December. Now breaking down the operating performance by main companies in the group. For the first half of '25-'26, full-service carrier recorded a 6.9% improvement in first half results. The LCC had an operating loss compared to a slight gain last year, and this is contributed by yield pressure from increased competition as well as increasing costs. SIAEC had an improved first half performance arising from stronger demand for EC's MRO business as well as improved operating performance from the associated companies. Now looking at the core business. Group passenger capacity in terms of ASK grew 3% in the first half of '25/'26. Cargo capacity measured in CTK terms was 2.8%. Overall, group capacity rose 2.9% in the first half of '25-'26. Now on numbers. Quarter 2 operating performance was also strong. Operating profit showed a 22.4% improvement compared to quarter 2 of last year. The revenue increase at 2.2% was in line with capacity growth of the same quantum, and this is partially offset by total expense, increase of 0.7%. For the full first half, our group revenue increased 1.9%, offset by total expenditure increase of 2%. Operating profit was 0.9% higher than the last year. Looking at our group's top line. Quarter 2 and first half group revenue rose 2.2% and 1.9%, respectively. This was contributed mainly by passenger revenue growth. At these levels, these are actually record quarter 2 and first half group revenue numbers. First half group PLF was 1.3% higher than last year as traffic growth of 4.6% exceeded passenger capacity growth of 3%. Yield continued to come under pressure from increased competition, declining 2.9%. Now combining the effect of traffic growth and yield, RASK, which is a measure of revenue per available seat carriage saw a marginal decline of minus 1.1% versus first half of last year. Now this RASK decline was actually already narrower compared to last year. Now this chart shows full-service and LCC performance. Blue part shows full-service and the orange part is Scoot LCC. Both airlines experienced healthy demand, resulting in first half load factor increase of 1 percentage point for full-service and 2.9 percentage points for LCC. FSC and LCC first half RASK experienced a decline of minus 1% and minus 3.5%, respectively, and this is primarily attributable to lower yields from competitive pressure. Switching to cargo. The cargo air freight market remains relatively volatile with the continuing tariff and trade policy uncertainties. Now regardless, the first half cargo carriage grew 1.2%, slightly lower than cargo capacity growth of 2.8%. Cargo yields continue to come under competitive pressure as airlines diverted U.S. freight capacity to other cargo lanes. So consequently, first half cargo revenue registered a decline of 2.8%. Group expenses increased 2% versus overall capacity growth of 2.9% Total group nonfuel expenditure grew 5.9%, mitigated by lower net fuel costs that decreased 6.7%. Now let me zoom in first on to nonfuel costs. This grew $353 million, driven by a combination of capacity growth and inflationary cost pressure. Just to highlight some of the items that have grown. Depreciation in leased aircraft charges increased 8.1%. This is primarily due to additional [ HMV ] engine overhauls as well as higher depreciation because we had new aircraft deliveries compared to same time last year. Other items, handling charges, passenger costs, landing parking and overfly experienced increases from a combination of increase in capacity, number of trips as well as rate increase. On a slightly more positive, fuel cost was $183 million lower, and this is primarily due to lower fuel prices before hedging, a weakening of USD against Sing dollar and notwithstanding an increase in volume uplift and a hedging loss this year versus a hedging gain last year. We continue to hedge our fuel requirements on a declining wedge basis. And in addition, we have also extended our hedge profile by taking opportunistic long-term hedges up to 5 years out in view of future fuel prices. And the chart and the table in this chart shows our fuel hedging position and average hedge prices as at 1st of November. Now putting this all together, this is our group operating profit number for quarter 2 as well as first half. Group operating profit for quarter 2 was $73 million better than last year. First half group operating profit came in $7 million higher than last year. Now looking at the waterfall, this basically summarizes where we're getting the benefit this year. We are getting positive from lower net fuel costs, higher passenger revenue contributed by resilient traffic demand and moderated by nonfuel cost components increase due to both capacity growth and inflationary cost pressure. Looking at net profit, these are our numbers. I think, again, the waterfall gives a better description. The decline in net profit for second half -- for first half is really down to 2 reasons that I already mentioned in the first slide. Firstly, there was a swing in net interest income last year to net interest expense this year. Secondly, it is really the share of losses of associated companies, mainly Air India. For first half of last year, we did not perform any equity accounting for Air India. So we have the full Air India first half loss this year. Air India actually had a very challenging year, as you would have read from the media. Post-AI171 incident in June, Air India did a voluntary safety pause in order to accommodate additional preflight checks after the incident. They have also stated that since the 1st of October, they have reinstated their pre-pause operations. And for Indian carriers, the ongoing closure of the Indian-Pakistan airspace since April of this year as well as the Middle East airspace closure in June, obviously also affected performance. Now this slide shows our group financial position. Firstly, just calling out our cash position. For cash, for SIA, you need to look at both the cash and bank balance as well as fixed deposits that are placed for tenures longer than 12 months. In accounting terms, these are not considered cash, but really they are. The sum total of 2 shows that we have a cash position of about $8.5 billion as at 30th of September. Our debt equity ratio has also improved since 6 months ago. It's gone from 0.82 to 0.70 as debt levels have been declining. Now as you saw from the previous slide, SIA has a very strong balance sheet and very strong financial position. Consequently, the company is planning to return capital to our shareholders, and this will be via a special dividend package of $0.10 per share that we will pay annually over the next 3 financial years. In total, this will come up to about $0.9 billion, okay? And this is a very strong reflection of our group's financial position. The first payment from this package, the Board has already declared an interim special dividend of $0.03 per share, and this will be paid to our shareholders on the 23rd of December. The second tranche of the $0.07 per share will eventually be subject to our shareholders' approval at the coming AGM. And really barring any unforeseen circumstances and requisite shareholder approval, the company expects to pay a special dividend amounting to $0.10 per share for the subsequent 2 financial years. Now first half, you can see our EBITDA margins off the base of that, the Board has declared interim dividend of $0.05 per share for the first half. Added to that, the interim special dividend of $0.03 per share, our total dividend that will be paid out to shareholders come 23rd of December is a total of $0.08 per share. This chart shows our group operating fleet development. No change from the last time we shared this. For the second half of '25-'26, we are expecting delivery of another 12 new aircraft and 2 retirements. Consequently, by the end of the year, our fleet is expected to expand by 10 aircraft to 218 units by the year-end. And this is my last slide for today. It shows our CapEx forecast for the rest of this year as well as the next 4 years. No significant changes compared to the version that we showed you last slide. And with this, I end my presentation, and I hand it over to our CEO.

Good morning, everyone. Once again, welcome to our briefing this morning. I'll start with showing these slides on our challenges. I won't elaborate on this because this is a slide that I've shown before. And those challenges stated on the slides continue to remain relevant. So we are well positioned. We continue to be well positioned to handle all these challenges. Jo-Ann has talked about our strong financial position. In fact, we believe that we continue to have one of the strongest balance sheet among airlines in the world. So adding both our cash balance as well as our FD, we have $8.5 billion. As Jo-Ann has stated earlier as well, we also plan to return capital. The fact that we're returning capital in a multi -- we're committing to this return in a multiyear package also underscore our confidence in the continued strength of our balance sheet. Digital is an important core aspects of our foundation. So as you may recall, we started a major digital transformation some in 2017 as part of our first transformation. And from there, we have established a strong digital culture within the organization. We strengthened our internal capabilities. We have enhanced our infrastructure and also established relationship to tap on resources and expertise outside of the airline itself. I am glad, and I'm sure all of you would have noticed the advancement we have made in the digital front. And with that foundation, were then able to transition to an adoption of the GenAI in -- starting from 2022, end of 2022. And as you can see from the slide here, we have explored many use cases, more than 300, of which almost 30% have been translated into actual production systems that are helping our staff to improve productivities, enhance customer service and also in the revenue generation area. Most importantly, as I have always stressed, our people are our most valuable resources. And for that, we will continue to invest in upskilling, reskilling and also providing our people with the appropriate tools, both digital and otherwise, in order for them to continue to improve and also innovate in a safe space. You would recall that we created KrisLab as part of our digital transformation, and that created an opportunity for our staff to actually explore ideas together with help from our IT segment, IT colleagues, and that allowed them to innovate and introduce more productivity tools at their job. In recognition of what we have done, we were awarded this particular award, which is the first time that the award has been given to any company. And that is a testament of how we have been actually committed, not just for the last few years, but consistently committed to enhancing our skill set of our people. Now beyond those foundations, we have consistently also been strengthening our other initiatives. And here, today, I would like to focus on the 3 key pillars of our brand promise, which is listed here. You'll see that even despite COVID period and all that, we have consistently been strengthening them. Starting with product. So since COVID time, you know that we have introduced a new lounge in T2 -- sorry, T3, followed by many other upgradings and new lounges that we've introduced around the world. We have, of course, in Perth, in Brisbane, in London, et cetera. And up and coming, we will continue to do more. So Bangkok lounge as well as Hong Kong lounge will be upgraded, and we're looking at building a new lounge in Melbourne. And of course, the rest of T2, you would be aware that we introduced a new first-class lounge in T2 recently, but the other T2 lounges will also be upgraded and refreshed along the way. You are aware also that we recently retired our last NG, 737NG. And with that retirement, the entire fleet within the SIA, the airline itself, the parent airline would be able to offer full flat seats on all our business class and also Wi-Fi as well as in-flight entertainment system on our -- basically throughout the entire network. I think we are probably the only airline, only major airline who can claim that we are offering that no matter how short distance you travel with us. So that is something that certainly would allow our passengers to have better enjoyment when they travel with us. This is something we have been talking about as well, which is the introduction of our new seats on our long-haul and ultra-long-range planes. We will be unveiling these products sometime within the first half of next calendar year. And this is something that we are very excited to do. It will also, together with the introduction of these new seat products, we will also introduce new dining experience, in-flight entertainment experience and also amenities. Something to watch out for. So I hope all of you will be able to join us at that particular launch. Service excellence continue to be a huge pillar for us. We have been recognized many times over. We continue to be the most awarded airlines, in recognition, particularly with respect to our service level. And we are not resting on our laurel. We will continue to look at what else we can do to enhance the service that we can provide to our customers. As part of the -- our review over the next few years, we are actually looking at how we can redefine the end-to-end service for our customers and introduce even more delights to our customers when they travel with us. On network, our diversified network, as you can see on the pie chart, our diversified network continue to be a strength in a world whereby there are lots of potential disruptions in different parts of the world. So we're not dependent on any particular market. This is also where our portfolio strategy has been very helpful. As you can see, combining SIA and Scoot, which are operating on 2 very different models and therefore, able to serve very different markets, we are able to enlarge the reach of the airlines as a group by significant numbers. Scoot, in fact, contributed 35% of total destinations -- frequencies, weekly frequencies that SIA Group is able to provide. Now if you look at the -- on the right side of the slide, we show you the distributions by region. You can see that, obviously, with Scoot operating largely up to medium haul, but a lot of it with the region, you can see that the frequency that we are able to provide in the region is particularly impressive. In fact, if you look around kind of the Asia Pacific region as a whole, you have China, which is the second largest economy in the world. You have India, which is going to be the third largest economy in the world by end of the decade. And you also have ASEAN as a region, which, again, is going to be the fourth largest economy in the world by the end of the decade. So we are in -- we're well positioned to serve 3 of the 4 biggest economy by end of 2030. And indeed, even our current frequency and reach indicate that by number of points served, we are among the largest to China, to India and certainly in Southeast Asia. And Scoot itself, if you look at Scoot, because of its expansion to new points and all that, Scoot has added in 2024 to date, I would say, maybe by the end of this financial year, it would have added 17 new points, unique new points to the group. Of course, network is also about how we collaborate, and you would be aware of the many strategic collaborations and partnership we have introduced over the last few years, especially. And that includes also our partnership with carriers in the region, such as Garuda and Malaysian Airlines. We have also started a strong collaboration with ANA. In fact, both for Garuda and ANA, we have introduced, already implemented rather, implemented the JV arrangements between selected points in Indonesia and Singapore and also between Japan and Singapore. So far, the results have been encouraging. With the partnership, we have also established strong codeshare arrangement with Air India. In fact, as a result of our close relationship with Air India, we have since introduced over 30 points access to domestic India through Air India. I would like to talk a little bit more about India. This slide, on the left side of the slide, your left as well, yes. You actually see the reasons why we want to be in India. I think I don't need to elaborate that because obviously, everybody would know the potential and the growth of India and certainly in the area of air travel. So our investment in India didn't start with Air India. It started actually more -- about 10 years ago in 2015 when Vistara was first formed between ourselves and Tata. Because of that commitment and because, as you know, we have made together with Tata, Vistara, the best airline in India, we were able to be at the table when the Indian aviation industry consolidates. And hence, our investments was translated into 25% of Air India. Our investment is certainly a long-term investment. I don't think anybody can dispute that potential of India and particularly being one of the 2 major carriers based in India, Air India. Air India, of course, have been carrying out their own transformation. I mean the CEO of Air India have announced this, about the 5-year transformation plan. As Jo-Ann has pointed out, Air India has had a difficult year so far, contributed by the capacity -- the safety pause and therefore, capacity adjustment following that as a result of the tragic AI171 accident. But it was also affected, as again, Jo-Ann has pointed out, air space closure and particularly for Air India because of the long-haul operations that it does more than the other competitor to Europe and to the U.S. There's also a third element about unfavorable exchange rate in the recent quarter. So all these are factors that have affected Air India's performance so far. But we continue to have strong belief in the growth potential of India and Air India. And together with our committed fellow shareholders, Tata, we'll continue to support Air India's transformation. At this point, maybe I'll point out that Jo-Ann has also pointed out the loss that we have accounted for -- equity accounted for from the Air India performance. I think it should be obvious to everyone, but I just want to point out that, that loss is accounting -- equity accounting loss, and therefore, it doesn't have a cash flow impact on SIA. This is my last slide, basically to again remind ourselves that we have been building on all these pillars and foundations, and we continue to be confident that we will be able to manage all these challenges that before us and also seize opportunities when they come about, as you can see in our very robust operating performance in the first half. Thank you.

Thank you, Choon Phong. While we set the tables up for the Q&A session, maybe I'll just quickly go through the house rules. [Operator Instructions] We are on a rather tight schedule because some of our executives need to catch a flight very shortly after this. So we will be ending on the dot at 10 a.m. Singapore time. And as we wait, just give us a minute, please. Okay. So I'd like to invite Choon Phong, our CEO; Jo-Ann, our CFO. We also have joining them, we have Lee Lik Hsin, our Chief Commercial Officer; Tan Kai Ping, our Chief Operations Officer; and Leslie Thng, the CEO of Scoot.

[Operator Instructions] Who would like to start, please? Yes, please, over there.

This is Tabitha from DBS. My first question is, are you able to share some insights on Scoot's yields? The decline of close to 8% year-on-year in the second quarter was sharper than expected and a negative surprise given that the decline accelerated again after showing signs of moderation.

Yes. Thanks for your question. I think if you look at what Choon Phong has mentioned, actually from last financial year until September, Scoot actually launched 12 new destinations. So these new 12 destinations actually will require time for the market to absorb the capacity. But I think what is also important to note is that the ability for Scoot to expand also allow SIA to be able to sell on the long-haul connecting to on our short haul. I think that is where the ability to cross-sell within the group is. The decline is due to also ForEx impact as well because many of the regional currency has also depreciated against the Sing dollars. Overall, I think the outlook for yield in the second half for Scoot is that we do expect the rate of decline to be moderated going forward because many of the routes that we have launched, you will realize that actually there is a very strong demand, meaning there is a demand for Scoot flight across the existing as well as new destinations. And we have always said that pricing is a function of supply and demand. So that will give us more confidence to do a bit of adjustment going forward.

Thank you, Leslie. Next question, please.

Hashim from PhillipCap. So how are you viewing your carrying of fair value of your investment in Air India, given its performance?

Yes. We're actually going to do just equity accounting against that. So it will be deducted from our book value.

Thank you. Maybe I'll go online first. Actually, no, why don't we go to Chuanren, then Peck Gek. And then we'll go online.

I'm staying on Air India. The challenges that Jo-Ann and Mr. Goh, yourself presented are tactical. I was wondering, is there anything that the group can do at a strategic level to help Air India turn around?

So as you might imagine, as strategic investors, we, of course, would like to do whatever we can to help Air India deal with the challenges in its transformation journey. So we do have quite a lot of interactions and engagement with colleagues in Air India and offering our expertise and help whenever that is needed as well as appropriate.

Peck Gek?

It's Peck Gek from The Business Times. What is the maximum investment that SIA is willing to invest in Air India? Or what is the maximum loss they are willing to tolerate?

I think you are asking a question for us to kind of do a projection, so we don't do that. All we say and continue to say is that we remain very committed to the transformation of Air India. This is a long-term investment for us, and we have no -- disillusion that along the way, there will be challenges.

Shall we go to Mayuko first?

I believe under the yield pressure, short haul is more vulnerable compared to the long haul. I would like to ask Mr. Goh, your comment on Qantas new super long flights that they are -- they have recently announced. How will this -- okay -- how will this affect your long-haul operation?

We believe that competition is really par for the cost. And of course, there will be new aircraft technology that enables new routes or new origin destination pairs to be flown as what Qantas is doing. But if you look at the capability of the aircraft and you look at the routes they are intending to fly the aircraft and the number of aircraft that they have ordered, in comparison with the total market size for some of those routes, we believe it is not something that is going to be insurmountable in terms of our ability to continue to be significant in that marketplace.

Thank you. We'll go online. We've got a couple of Air India questions as expected. Maybe we'll start with Danny Lee from Bloomberg. SIA said it's committed to Air India's transformation. Has Air India approached SIA as part of its ongoing overhaul for more money? If so, how much?

Again, we don't comment on discussion between shareholders. If there is something that can be announced, we will certainly do that.

Thank you. We have Abhishek Law from the Mint in India. Can the losses at Air India be quantified for H1? And what are the reasons for this loss? And the second question he's asked is, is Air India's transformation program delayed? Fleet additions and refurbishments are slow. What is SIA's comments on this?

Can you repeat the second question?

Can you comment on Air India's transformation program? Because he's suggesting that the fleet, it is delayed, it is still going too slow. Fleet additions and refurbishments are going slow.

So in -- for both questions, actually, it's a question will be posed to Air India. Certainly, Air India CEO has been talking about the transformation progress, and you should watch that space.

In terms of quantifying the loss at Air India?

Same thing. It should be a question posed to Air India. We are a shareholder, but actually, we are a minority shareholder in this case. So it is a question that Air India should be addressing rather than us.

Okay. And the third question from online is from Kimberly Kao from The Wall Street Journal. Has customer confidence been affected when it comes to Air India? And is there a possibility that you'll consider selling your stake in Air India?

So customer confidence, if you look at Air India's own published data on their load factor and all that, at least from those statistics, it doesn't indicate any loss of confidence.

One more question from online is from Tan Sue-Ann in The Straits Times. She has a question on the delay of the 777-9. Can you shed light on the operational impact of the delay to 2027? What interim measures are there to manage any capacity shortfall? And will that entail operating 777-300ERs longer than planned? And is SIA seeking compensation from Boeing?

So any compensation discussion, again, is between us and the OEM, so it's not for us to disclose. But I think all of you will be aware that SIA has always built in flex in our fleet plan. So in this case, even with the delay, we don't expect it to have any major impact.

Thank you. We'll go back to the room.

Is the return of the capital meant to compensate for the drop in interim dividend?

I think as I explained, the return of capital is because we are in a very strong financial position. I shared our cash balance at $8.5 billion. So those 2 things are quite different.

Thank you, Jo-Ann. Over here, please. Sorry, if you could, for the record, just identify yourself.

Sorry. I'm Amy from Standard Chartered. As Singapore Airlines continue to selectively expand its network, what financial hurdle rates do you apply when exploring to these new routes?

I don't think we will speak about our internal hurdle rates, but we certainly consider our network growth from a longer-term commercial perspective.

Chuanren?

On fleet, I know you don't discuss your negotiations with OEMs. But overall, I'm wondering what's your assessment of the aircraft market right now? Does delays in progress make it harder for you to make a move looking forward? And a quick second question, can you expect more about the Wi-Fi LEO product that you'll be introducing?

So your -- sorry, your first question again?

Just about [indiscernible].

Yes. Okay. Particularly, I think you are also asking its impact on us specifically, yes? Obviously, this is well reported that there are delays. Both OEMs have reported that. I mentioned earlier that as we build our fleet plan, we have built in flex. So we are able to, for example, extend the use of existing planes to cover for it. And obviously, you can expect that there will be discussions with OEMs on some of these actions that we are taking. And so far, it hasn't affected us in that. As for delivery delays and all that or future aircraft supply, I would just say that, in some sense, SIA is in a privileged position as one of the leading carrier. So you can expect that we should have some preferential treatment.

Chuanren, your question on LEO, is there any specific area you want me to address?

[indiscernible]

Yes. So the OEM of the LEO is this is a confidential discussion, so I can't disclose. We do want to start with the long-haul fleets. So we will retrofit starting next year because that is where customers can benefit most, right? So it will -- customers will benefit from not just massively higher bandwidth, but also much better reliability in terms of Internet connectivity, so watch the space. Yes, you can file your analyst report [ onboard ] next Singapore Airlines flight, full multimedia.

Next question. We have a question actually online from Anthony Lo from BNP Paribas. Can you help us understand where nonfuel cost increases are coming from in more detail for SQ?

So Anthony, I think I've already called out the major areas of nonfuel cost increase, primarily being around depreciation, lease aircraft, the handling charges, passenger landing parking and overfly. So the numbers are all there in the chart. Those are what we have disclosed. Whether or not it applies to -- actually, all of this primarily is for -- applies to the airline and SIA being a major contributor, it is actually applicable for SIA as well.

Thank you, Jo-Ann. We have a question from Alfred Chua from FlightGlobal. It's a question on the fleet. What is the AOG situation now with Scoot? Are there signs of improvement? Or will it continue to increase?

I believe he's referring to the Pratt & Whitney engine issues. So this year, we did have a slightly higher average number of aircraft that has been grounded because of Pratt. On average, for April to September, we have an average of about 6.5 aircraft that has been grounded. But having said that, back to what Choon Phong has mentioned, we have actually extended the older generation of 320ceos by a couple of years just to mitigate the impact on grounded aircraft. And at the same time, because we have inducted the E2s. So some of the E2s besides the new destinations that we have launched, we actually are deploying the E2 on some of the existing 320 destinations so that we can continue to maintain the breadth of our network.

Thanks, Leslie. Another question from Danny Lee from Bloomberg. On outlook, what visibility does SIA have on travel demand in 2026?

We expect travel demand to remain fairly stable. Of course, there is increasing competition, but certainly, the passengers continue to want to fly.

Thank you, Lik Hsin. Maybe we'll go to Mayuko, please.

Sorry, just another Air India-related question. You were saying that Singapore Airlines will do the support that is necessary. Would you please be able to share what are the support that you have been offering in addition after -- especially after the accident, what they need more now?

So this is again something that is managed and engaged between us and Air India, and we do not disclose that. But suffice to say that whatever areas where we are able to offer support or sharing, we will do so.

Thank you. Any other questions?

Have all the markets recovered compared to the pre-pandemic?

From a load factor point of view, you can see that our load factors are very strong and in fact, have been improving. So from that perspective, I would say, yes. Overall, the market has recovered. But of course, market to market, there are variations. But from a total point of view, it is fully recovered.

Sorry, can you get that mic?

It's okay. I heard the question. The question was whether the Chinese market has recovered. Again, as I said, we have very diverse sources of revenue from different locations. If you look at our Chinese flights load factors, those have also recovered back to pre-COVID levels. They are in the mid-80s now. As you probably know, China was one of the few flights where initially out of COVID, the load factors were not back up to pre-COVID levels, but they certainly have recovered back to pre-COVID now.

Thank you, Lik Hsin. Any other questions from people in the room? And none online?

Claudia from CNA here. Just wanted to ask, you guys have been investing heavily in new aircraft and workforce training. Can you quantify any cost efficiencies or productivity gains so far? And if not, then when do you expect these benefits to show up?

Maybe I will answer in general. Aircraft technology, as you move from older generation to the next generation, typically, you can get up to, let's say, 25% improvement in fuel efficiency. So -- and if you look at our fleet of planes and you look at -- so it's one way to measure aircraft, whether we have modern technology aircraft is by the average aircraft age. And ours is about 7 years. That is -- I mean, if you look at the industry, it's more than double that it's more like 15 years. So you can imagine the efficiency that we can get from there. As to productivity improvement and all that, every single initiative that we launched, whether it is to improve productivity of staff or to get us more opportunities on revenue side or to improve operations, all of them will have KPIs that is monitored and been met, but we don't disclose them. But you can actually see by how our unit costs have been quite consistent over the years despite escalating costs that you can see all around.

Thank you, Choon Phong. We've got one more question from online -- from Danny, Bloomberg. What's the state of AOG for SIA mainline aircraft on Rolls-Royce-powered aircraft?

I would say it's nothing significant. We -- there are maintenance intervals and inspections as usual for certain engine types, but they are well absorbed within the maintenance provisions that we have in the fleet. So I have nothing particularly significant to call out.

Thank you. We have another question online from Abhishek from Mint again. Is there a scope to have more members from SIA on the Air India Board? Are those discussions underway? And secondly, post-crash, what overhaul in processes would you suggest for Air India?

So as you can imagine, Board representation is typically in proportion to your shareholding. But I don't think that is the key issue because we have a very strong and engaging relationship with the other major shareholders, Tata. So there is no lack of engagement and interaction even at a working level. So that is not what I'll be concerned about.

Thank you. We've got another question from Kimberly Kao from Wall Street Journal. Could you shed some light on how Jetstar Asia's exit has affected the industry and your impact on the strategy with Scoot?

I think since the exit of Jetstar Asia, Scoot, we have announced launching 2 new destinations, Okinawa as well as Labuan Bajo from December. At the same time, we have also increased capacity together with SIA to some of the existing or the old Jetstar Asia destinations, including Bali, Jakarta, Bangkok, Penang, Manila. At the same time, the group, we have also proactively worked with Jetstar Asia at that time in terms of trying to reaccommodate their passengers. And more importantly, because we continue to build the Singapore hub. And as we grow, we will need talent as well. So we have also recruited some of the formal Jetstar colleagues, whether it's pilots, cabin crew or ground staff into the whole SIA group.

Thanks, Leslie. Any last questions? Chuanren?

On products, you are hinting a new first class and business class products. What is the plan for the A380 for these new products? And what is the fit of the A380s once the 777-9 is introduced?

So we're not hinting. We're saying that we will be launching by the first half or unveiling by the first half of the next calendar year. For the A380, we did our refresh. Actually, it's more than a refresh. It was a whole retrofit. And the products on the A380 and if you look at our first-class suite is continue to be industry-leading. So there's no plan at the moment to have any further retrofit.

Great. Last word from Chuanren then. Thank you, everyone. Thank you for coming today. Thank you for everybody online. Have a good day and a good week, everyone -- good weekend. Thank you.