SIA first-quarter new profit slips, but revenue rises

SIA plans to enhance its competitiveness by adding modern and fuel-efficient aircraft to its fleet as it further expands its network.
SIA plans to enhance its competitiveness by adding modern and fuel-efficient aircraft to its fleet as it further expands its network.ST PHOTO: ALPHONSUS CHERN

Net profit at Singapore Airlines (SIA) for its first quarter fell by 8.6 per cent to $235 million, but the drop was due mainly to the absence of a one-off gain from a subsidiary recorded last year.

At the operating level, SIA reported a profit of $281 million in the April-to-June quarter, 45.6 per cent higher than in the same period last year, as it filled more seats, said the airline yesterday.

Group revenue rose by 5.6 per cent year on year to $3.86 billion, while spending increased by 3.4 per cent to $3.6 billion.

Net fuel costs rose 3.4 per cent, as a $115 million reduction in fuel hedging losses partially offset the $145 million increase in fuel costs before hedging, caused mainly by higher average jet fuel prices.

Excluding fuel, costs were up 3.4 per cent, attributable partly to expansion at SilkAir and Budget Aviation Holdings, which is the parent company of budget carriers Scoot and Tigerair.

Earnings per share fell to 19.9 cents from 21.7 cents a year earlier, while net asset value per share was $11.11, higher than $11.07 as at March 31.

  • AT A GLANCE

  • REVENUE: 
    $3.9 billion (+5.6%)

    NET PROFIT: 
    $235 million (-8.6%)

The industry remains challenging, said SIA, as the uncertain global economic climate and geopolitical concerns, coupled with overcapacity in key markets, continue to dampen yield performance.

Fuel prices are expected to remain volatile in the months ahead, as the oil market continues to adjust to demand-and-supply conditions.

In an industry update earlier this month, director-general and chief executive of the International Air Transport Association Alexandre de Juniac said that passenger demand is solid.

"But the rising price of fuel and other input costs are likely to see airlines' ability to stimulate markets with lower fares taper over the coming months," he said.

To enhance operating efficiency, SIA will continue to take delivery of modern and fuel-efficient aircraft to further expand its network, and enhance its competitiveness in both the full-service and low-cost market segments, said the airline.

During the April-to-June quarter, the parent airline put four more Airbus 350s into service, while Budget Aviation Holdings added two Boeing 787s fitted with crew rest bunks for long-haul services.

The merger between Scoot and Tigerair, which now operate under a single Scoot brand, will also provide more expansion opportunities for the group's low-cost segment, said SIA.

The group's transformation programme is ongoing.

The aim is to identify new opportunities for revenue generation and restructure its cost base.

A version of this article appeared in the print edition of The Straits Times on July 28, 2017, with the headline 'SIA first-quarter profit slips, but revenue up'. Print Edition | Subscribe