SIA Q2 net profit up 68% on better results from associates, joint ventures; Scoot's operating loss widened

SIA Group has declared an interim dividend of eight Singapore cents per share, same as the previous corresponding period, to be paid on Nov 27.
SIA Group has declared an interim dividend of eight Singapore cents per share, same as the previous corresponding period, to be paid on Nov 27.PHOTO: REUTERS

SINGAPORE - The grounding of six Boeing 737 Max 8 jets put a drag on regional carrier SilkAir’s first half (H1) showing even as the Singapore Airlines (SIA) Group turned in a higher net profit for the same period.

Benching the problematic 737 Max 8 jets - grounded on March 12 this year after the loss of Ethiopian Airlines flight ET302 - meant SilkAir clocked an operating loss of $19 million for the six months ended Sept 30.

In contrast, SilkAir’s loss for the corresponding period last year had been just $3 million.

The carrier’s expenditure for the period also rose by $10 million, which was attributed to 737 Max 8-related costs and higher fuel prices.

However, the carrier saw passenger flown revenue growth of 0.9 per cent.

Overall, the airline group - including low-cost carrier Scoot and SIA Engineering - saw net profit rise 5.1 per cent for the six months ended Sept 30, due to higher passenger traffic.

That boosted revenue for the group by 5.3 per cent, or $418 million from the previous corresponding period, SIA Group announced on Tuesday (Nov 5) in its results statement.

For the second financial quarter under review, the group saw a 67.9 per cent jump in profit, or $38 million, to $94 million due to improvement in its share of results from associates and joint ventures.

Low-cost carrier Scoot continued to see red, even as it saw higher passenger revenue amid an expansion in capacity.

 
 
 

It clocked a loss of $77 million for the first half, widening its loss from a year ago.

Expenditure rose 8.5 per cent or $74 million, mainly due to higher depreciation from a larger fleet. The carrier continued to proactively reduce aircraft utilisation during the period to improve operational resilience, SIA Group said.

It saw an operating loss of $39 million for the second financial quarter.

The group expects passenger booking in the coming months to be stronger year-on-year, but will see headwinds from intensifying competition in key operating markets as well as uncertain global economic outlook.

Cargo in particular is expected to remain weaker-on-year.

SIA Group said fuel prices are expected to remain volatile as a result of geopolitical and economic risks, and as a result has hedged 75 per cent of its fuel requirements for the second half of the current financial year.

“As it enters the final lap of its three-year Transformation programme, the SIA Group remains committed to enhancing customer experience, improving operational efficiency and boosting revenue by strengthening digital capabilities,” the group said of its outlook.

It has improved its digital outreach through a reworked KrisShop and a new mobile app.

SIA Group declared an interim dividend of 8 Singapore cents per share for its first financial half year, which will be paid on Nov 27.