News Content

Singapore Airlines cautious about future but H1 net profit up

SINGAPORE Airlines (SIA) has posted a first-half profit of SGD305 million (US$217 million), an increase of SGD179 million from the year-ago period due to an improvement across all of its business units, particularly regional carrier SilkAir, and lower fuel expenditure.

However, with uncertainty about China's economic conditions, SIA said that the "outlook for both passenger and cargo traffic is cautious," Air Cargo World reported.

SIA Cargo narrowed its operating loss significantly from SGD34 million to SGD12 million. But, cargo yield declined by 8.5 per cent largely due to lower fuel surcharges, while freight carriage was flat, resulting in lower revenue and a loss of SGD86 million. However, this was more than offset by a SGD108 million reduction in expenditure, mainly from lower fuel costs.

In the second quarter, SIA Cargo reported an operating loss of SGD3 million, which was an improvement over Q2 2014-2015's loss of SGD16 million. The cargo division was flat in freight tonne kilometers in the first half, year over year, while capacity grew by 2.6 per cent. SIA's load factor fell 1.5 points to 60.7 per cent.

First-half revenue fell 4.5 per cent to SGD5.1 billion due to lower passenger numbers and yields, the airline said. Expenses lowered 5.7 per cent to SGD4.9 billion from the year-ago period, to give an operating profit of SGD214 million, up 40 per cent from a SGD125 million operating profit in the prior-year half.

The Singapore flag carrier itself reported a traffic fall of 1.7 per cent and a 3.7 per cent drop in overall yield, but SilkAir countered this with an 11.1 per cent growth in passenger traffic and a 0.8 per cent rise in yield.

The figures do not include the results from SIA's majority-held subsidiary, Tiger Airways, which reported a SGD1.1 million net loss in June this year.

SIA holds 55.8 per cent of the low-cost carrier (LCC), but has submitted an offer for all remaining shares at a 32 per cent premium on current market rates. This would see SIA spending over SGD315 million on total ownership of the loss-making LCC.

SIA CEO Goh Choon Phong said if the offer was successful, Tiger would be delisted and taken completely into the group. This would allow SIA to push further integration and network synergies between Tiger and its wholly owned long-haul LCC Scoot.

"This [will] ultimately strengthen the SIA group," said Mr Goh, adding that the potential takeover of Tiger would bring "an additional engine of growth in an expanding segment of the air travel market."