SATS Ltd. (SATS) is expecting the recovery trajectory in the aviation industry to ramp up in the second half of the year as it reported higher group revenues in the quarter ending June 30, 2022.
The ground handling and in-flight catering service provider said the Group revenue increased US$99.9 million or 36.2% higher year-on-year to US$375.5 million in April to June period, on the back of travel growth to 55% of pre-pandemic flights and the inclusion of Asia Airfreight Terminal's (AAT) revenue of US$32.4 million.
Increase in gateway services cited
SATS noted that revenue from Food Solutions increased 26.4% or US$38.9 million to US$186.2 million, while revenue from Gateway Services grew 49.1% or US$62.3 million to US$189.3 million for this period.
The major ground handler at Singapore Changi Airport noted that the expansion is "primarily driven" by aviation recovery and consolidation of AAT from March 2022 — as it painted a rosy prospect for the aviation sector moving forward.
Nonetheless, it warned of inflationary pressure that continues to pose risk to the full recovery of the industry.
SATS noted said it has taken "full advantage" of the lull in air travel during the pandemic to invest and embark on numerous digitalisation, automation, and innovation initiatives, to improve and strengthen our operational excellence across Food Solutions and Gateway Services.
"In support of our growth on the back of aviation recovery, we have been ramping up our operations and building up our resource capacity and capabilities to meet the anticipated increased volume," it said in its quarterly report.
Recovery trajectory to continue
"We expect the recovery trajectory to continue and accelerate in the second half of this year, but inflation will remain a challenge for us to mitigate through productivity measures," SATS added.
Meanwhile, it backed the International Air Transport Association (IATA)'s expectations that global passenger numbers will recover to 83% of pre-pandemic levels at the end of 2022, fuelled by pent-up demand and the lifting of pandemic restrictions in most markets.
SATS noted that while China's zero-COVID policy "continues to dampen" the pace of recovery for the Asia Pacific, air travel, on the whole, is expected to increase.
"SATS remains focused on capitalising on growth opportunities to broaden our revenue streams and replicate our core competencies and capabilities across key markets overseas," said Kerry Mok, president, and chief executive officer of SATS Ltd.
"We will continue to drive operational excellence, efficiency and productivity across the value chain, to fuel sustainable business growth as well as to mitigate inflationary pressures," the SATS chief executive added.