In its outlook statement, SIA mentioned that the recovery in international air travel is slower than expected and industry experts have continued to revise their projections downward. A full recovery could take 2-4 years according to industry forecasts. For SIA, its own forecasts are that passenger capacity would not reach 50% of pre-Covid levels by the end of FY21 (Mar 2021) and will continue to re-assess its fleet size and network. For the end of 2QFY21, SIA projects that its passenger capacity would be c.7% of pre-Covid levels, a >7x jump from the current levels of <1% of pre-Covid. 

SIA appears more positive on cargo recovery as the reopening of economies and manufacturing plants could imply a greater need for air freight. It is also looking to deploy cargo-only passenger flights when justified. SIA currently has 7 freighters and 33 passenger aircraft that are deployed on cargo-only services. 

When the recovery comes possibly in 2022, SIA will also have to bear the extra maintenance costs of getting their parked aircraft back to air-worthy shape. It currently has 119 aircraft parked at Changi Airport and 29 in Alice Springs. I also do hope that by 2022, most of SIA's high fuel hedges have worn off and SIA can start getting better margins. 

On the bright side, SIA has raised $8.8bn from the rights issue and secured other lines of financing worth c.$2.2bn since Mar20 and this could put it in a better shape vis-a-vis competitors who may not have the backing of a strong parent. We have also seen other airlines like AirAsia having going concern issues and this could be a slight positive when the recovery does come for surviving airlines. 

Overall, I believe that this set of results is more negative than expected and could lead to a further softening of SIA share price.