Singapore Airlines has joined the list of carriers recording strong results, posting a second quarter net profit more than double that of the corresponding period last year. The carrier warned, however, that an economic slowdown in emerging markets led by China made the future uncertain.
In an issued statement, the carrier said net profit for the three months to September soared 135% to USD 152 million, helped by higher dividends from long-term investments.
Lower fuel costs – combined with a lack of share loss from associated companies after budget carrier Tiger Airways was classified as a subsidiary – also helped earnings. (Tiger became a subsidiary last year as SIA boosted its stake in the budget carrier by almost 16% to 56%.)
Operating profit climbed by 40.4% and non-operating items contributed significantly to that. The airline described the operating environment as “challenging”, with yields under pressure.
Total revenue of the parent airline company declined SGD 324 million, largely attributable to a SGD 278 million reduction in passenger flown revenue stemming
from a 1.7% fall in passenger carriage and a 3.7% drop in passenger yield.
Note, the Singapore dollar (SGD) is worth almost exactly the same as the Australian dollar (AUD) at present.
The SIA group earned an operating profit of SGD 240 million in the first half of the 2015-16 financial year, SGD 69 million higher (+40.4%) than last year.
Excluding Tiger Airways, group operating profit improved SGD 79 million (+46.2%) year-on-year to SGD 250 million.
Group revenue declined SGD 345 million to SGD 7,242 million (-4.5%). Passenger
flown revenue fell SGD 204 million or 3.5%, mainly attributable to lower flown revenue from the parent airline company, as passenger carriage and yield declined against the same period last year. Cargo and mail revenue recorded an SGD 87 million decline (-7.9%), as both load factor and yield suffered from overcapacity in the market.
Engineering services revenue fel SGD 53 million (-22.5%) on the back of reduced overhaul activities.
Income earned upon the release of seven A350-900 delivery slots originally planned for FY2017-18 and FY2018-19 was offset by a fall in other incidental revenue.
Group expenditure fell SGD 424 million to SGD 6,992 million (-5.7%), on the back of a SGD 458 million reduction (-16.3%) in net fuel expenditure. Average jet fuel price was 41.1% lower than one year ago, providing SGD 1158 million in cost savings. This was partially offset by the strengthening of the US Dollar against the Singapore Dollar (+ SGD 142 million).
As a result, Group fuel cost before hedging declined SGD 1,015 million or 36.1%. The reduction was partly eroded by a SGD 545 million hedging loss (+ SGD 557 million).
The Group posted a first-half net profit of SGD 305 million, an increase of SGD 179 million from the same period last year.
Edited by William Sykes