Sunday, November 9, 2014

Singapore Airlines reports 3rd quarter results

Singapore Airlines 777-312(ER) (34575/623) 9V-SWJ arrives at London-Heathrow (LHR/EGLL) on September 18, 2012 sporting the carriers "Star Alliance" livery.
(Photo by James Mepsted)

Singapore Airlines Group reported a net profit of SGD126 million ($97.5 million) for the half year ended Sept. 30, down 55.5% from the SGD282.4 million reported for the same period in the previous financial year.

The airline group said its net profit had been severely affected by associates’ losses, and acknowledged that passenger yields remain under pressure, leading to a largely flat first half operating result.

The group’s operating profit was up 1.2% for the first half of the 2014-15 financial year, reaching SGD171 million from SGD167 million year-over-year.

However, group revenue fell 2% to SGD7.6 billion, with passenger revenue down 0.4% despite a 1.4% increase in traffic. The competitive operating environment and depreciating revenue-generating currencies helped push yield down 1.8% year-over-year.

Cargo revenue declined 1.6%, driven by a 3.8% capacity cut, although this was partially compensated by better yields and higher load factor.

On a positive note, group expenditure was down 2.1% to SGD7.4 billion, with falling fuel costs a major contributor.

Singapore Airlines’ operating profit fell 1.6% during the first half to SGD183 million. Revenue was down 2.4%, but was nearly offset by a 2.4% reduction in expenditure, due to lower fuel costs after hedging and stringent cost management.

Passenger numbers grew 1% to 9.5 million, with RPKs up a scant 0.12% to 48.52 billion. ASKs dipped slightly 0.15% to 60.83 billion. Passenger load factor was up 0.25% to 79.8% for the first half year.

SIA Engineering’s operating profit fell 33.9% in the half year to SGD37 million. Total revenue fell 0.7% as a result of lower airframe and component overhaul revenue, while expenses increased 2.8%, primarily as a result of an increase in subcontract services.

Singapore Airlines’ regional affiliate SilkAir reported its operating profit plunged 77.3% to SGD5 million, as weaker yields (-5%) put a drag on revenue and a 3.7% capacity injection pushed up operating expenditures.

Passenger numbers increased 2.4% to 1.73 million, with RPKs up 4% to 2.84 billion. ASKs were up to 4.08 billion from 3.93 billion in the year-ago period. Passenger load factor improved 3.8% to 69.7%.

SIA Cargo’s operating loss narrowed to SGD34 million from SGD71 million for the same period last year. Improved capacity management saw yields improve 1.9%, while load factor was up 0.2 percentage points.

The outlook remains “competitive and challenging, as an uncertain global economic climate and geopolitical concerns persist,” the airline group said. “Demand is generally flat, and yields will remain under pressure amid intense competition from other airlines and promotional activities in weaker markets.”

“While there has been a reprieve from cost pressures arising from the decline in fuel prices in recent months, there is concern that the decline reflects a slowdown in major economies in the world which could ultimately hurt travel demand.

The group will continue to track market movements closely and make appropriate adjustments to capacity, while practicing cost discipline in all business areas. With a strong balance sheet, the group is well positioned to meet the challenges ahead,” it said.

(Anne Paylor - ATWOnline News)

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