SIA posts record quarterly profit of $734 million for Q1

SINGAPORE – Amid pent-up demand for air travel, Singapore Airlines (SIA) posted a net profit of $734 million for the first quarter of its current financial year.

It is a record quarterly performance in the carrier’s history, and a 98.4 per cent increase from the $370 million net profit for the same period in the previous financial year.

This comes after the airline posted its highest full-year net profit in its 76-year history of $2.2 billion for the previous financial year.

The record profit for the quarter ended June 30 was mainly attributable to better operating performance, a net interest income versus a net finance charge last year, and a share of profits versus a share of losses of associated companies last year, all of which partially offset this year’s higher tax expense, said SIA in a bourse filing on Thursday.

Revenue rose 14 per cent year on year to $4.5 billion, from $3.9 billion a year ago.

Passenger flown revenue grew 37.4 per cent to $1 billion, partially offsetting a 50.6 per cent decline in cargo-flown revenue.

The group posted an operating profit of $755 million, $199 million higher than the $556 million operating profit a year before.

SIA generated record operating profit of $738 million, an improvement of $113 million. Operating profit for budget carrier Scoot came in at $24 million, up $76 million compared with the prior year.

Earnings per share for the first quarter stood at 14.3 cents, up from 5.8 cents a year ago.

Group passenger capacity expanded 32.4 per cent year on year as restrictions on international air travel eased globally.

SIA and Scoot carried 8.4 million passengers during the quarter, 65.5 per cent higher than the year before.

Passenger traffic and load factors improved across all markets, with year-on-year traffic growth of 49 per cent outpacing the capacity expansion.

As demand for air freight continued to soften, cargo loads fell 11.3 per cent year on year, while capacity grew 12.1 per cent, primarily from the increase in belly-hold capacity as more passenger flights returned to service.

Expenditure for the airline increased 10.5 per cent to $3.7 billion. The 27.3 per cent rise in non-fuel expenditure was partly offset by a 17.3 per cent decline in net fuel cost, which came in at $1.1 billion. The fall in net fuel cost was due to a 33.4 per cent decrease in fuel prices.

However, SIA noted that the increase in non-fuel expenditure was within the 32.4 per cent rise in passenger capacity.

The national carrier said that demand for air travel is expected to remain robust for all route regions through the summer peak, with forward passenger bookings closely tracking capacity injection across most markets over the next three months.

While it expects competition to intensify in the coming months as more capacity is injected into international routes, it said that the company is well positioned in this operating environment.

However, cargo demand is expected to remain soft in the near term due to inflation and weak economic conditions. Higher competition, as well as softer cargo demand, may continue to exert downward pressure on cargo yields, particularly on key trade lanes, it added.

SIA also said that its fuel hedging contracts at lower Brent crude oil prices before the Covid-19 pandemic have matured as at the end of the first quarter.

The remaining hedge positions from the second quarter onwards are at prices closer to prevailing market levels.

It also said that macroeconomic and geopolitical uncertainties, as well as inflation, could pose challenges for the airline industry. But it said that it is in a “strong position” to navigate these challenges and benefit from future opportunities, due to the strength of the group’s portfolio and multi-hub strategies.

SIA shares dipped 0.1 per cent to close at $7.52 on Thursday, before the results were announced.

THE BUSINESS TIMES