SIA's Q2 earnings surge on lower fuel prices

Tigerair's reclassification from an associated company to a subsidiary last month meant an absence of a share of its losses in the quarter, said SIA. All the key units did better compared with a year earlier, except for the parent premium airline, wh
Tigerair's reclassification from an associated company to a subsidiary last month meant an absence of a share of its losses in the quarter, said SIA. All the key units did better compared with a year earlier, except for the parent premium airline, which reported a drop in operating profit on the back of lower yields.ST FILE PHOTO

Investment dividends, Tigerair reclassification also boost profits

Lower fuel prices, higher dividends from investments and budget carrier Tigerair becoming a subsidiary boosted second-quarter profits at Singapore Airlines (SIA).

Earnings for the three months to Sept 30 surged 135 per cent year on year to $213.6 million.

The reclassification of Tigerair from an associated company to a subsidiary last month meant an absence of a share of its losses in the quarter, the airline said yesterday.

Revenue fell from $3.9 billion to $3.8 billion, while spending was flat at $3.7 billion.

All the key units did better compared with a year earlier, except for the parent premium airline, which reported a drop in operating profit from $138 million to $98 million on the back of lower yields.

  • AT A GLANCE

  • NET PROFIT:
    $213.6 million (+135%)


    REVENUE:
    $3.84 billion (-1.5%)


    DIVIDEND (INTERIM):
    10 cents per share

Regional arm SilkAir and the group's engineering arm SIA Engineering improved profits, while SIA Cargo and long-haul budget arm Scoot reduced their losses.

The end result was a group operating profit of $129 million, 2 per cent down from a year earlier.

Half-year profits rose by 142 per cent to $304.8 million, while revenue was flat at $7.6 billion.

Earnings per share was 18.3 cents for the second quarter, up from 7.7 cents a year earlier. Net asset value per share was $10.83, higher than the $10.66 as at March 31.

SIA said yesterday that the uncertainty in economic conditions persists, exacerbated by concerns over China's slowing economy, which led to weakening emerging-market currencies and stock market volatility.

"The outlook for both passenger and cargo traffic is cautious," it said.

Yields remain under pressure in the face of capacity additions from other airlines.

While advance passenger bookings for this quarter are positive, these are mainly bolstered by promotional activities, the airline said.

SIA said it will maintain strict cost discipline and leverage the various airlines within the group to tap all key market segments. For example, Scoot, which operates bigger aircraft, took over Hangzhou services from SilkAir, commencing flights to the city four times weekly from last month. It also launched services to Melbourne last Sunday.

Scoot will take over SIA's three non-stop services a week to Jeddah, Saudi Arabia, from May 1, if approved by regulators.

SIA will soon get its Airbus 350s, the first of which will be used to operate Singapore-Amsterdam services from April.

The airline has signed a deal with Airbus to be the launch customer for a new ultra-long-range variant of the A350-900 aircraft, able to fly non-stop between Singapore and the United States. SIA, which axed its non-stop flights to Los Angeles and New York in 2013, plans to resume services in 2018 with the new planes.

The results were released after the markets closed. The airline declared an interim dividend of 10 cents per share. SIA shares closed 13 cents up at $11.15 yesterday.

A version of this article appeared in the print edition of The Straits Times on November 06, 2015, with the headline 'SIA's Q2 earnings surge on lower fuel prices'. Print Edition | Subscribe