SIA's Q3 net profit falls after Tigerair write-down

A man walks past a Singapore Airlines signage at Changi Airport in Singapore.
A man walks past a Singapore Airlines signage at Changi Airport in Singapore.PHOTO: REUTERS

Third-quarter net profit at Singapore Airlines (SIA) fell by 35.6 per cent to $177.2 million - owing in large part to a write-down.

The group recognised a $79 million write-down of the Tigerair brand and trademark, following the announcement by Budget Aviation Holdings that budget carriers Tigerair and Scoot would operate under a common "Scoot" brand.

There was also an absence of a gain from SilkAir's sale and leaseback of four 737-800s, reported in the previous year.

At the operating level, profit increased by 1.7 per cent year on year, to $293 million.

Group revenue fell by 2.5 per cent to $3.84 billion, mainly attributable to lower passenger flown revenue in a weak-yield environment, SIA said yesterday.

Total spending contracted by $102 million - a 2.8 per cent dip - to $3.6 billion.

  • AT A GLANCE

  • NET PROFIT: $177.2 million (-35.6%)

    REVENUE: $3.84 billion (-2.5%)

Quarterly earnings per share was 15 cents, down from 23.6 cents a year earlier, while net asset value per share was $11.72 as at Dec 31, up from $10.96 as at March 31 last year. Net profit for the nine months to December fell by 14 per cent, to $499 million.

The future will be challenging, said SIA, amid tepid global economic conditions and geopolitical concerns, alongside other market headwinds such as overcapacity and aggressive pricing by competitors.

Loads and yields for the passenger and cargo businesses are seen to remain under pressure.

Fuel prices have trended upwards since last quarter and are expected to remain volatile as uncertainty lingers around global oil production output, SIA said.

On the positive side, an expanding, fuel-efficient Airbus 350-900 fleet has enabled the addition of more long-haul routes.

The airline has ordered 67 of the planes, which started arriving last year.

Plans for deeper integration between Scoot and Tigerair will continue so that the group can capitalise on new opportunities to boost network connectivity and growth in the low-cost airline segment, SIA said.

Scoot, which operates long-haul flights with an all-Boeing 787 fleet, intends to spread its wings further this year. In June, it will launch flights to Athens - its first service to Europe.

Tigerair also intends to expand after several slow years, as demand for intra-Asian travel is expected to stay strong in the coming years.

SIA said it will stay vigilant when it comes to its costs, adding that its strong balance sheet positions it well to weather the many challenges ahead.

SIA shares fell by nine cents, or 0.92 per cent, to $9.72 before the results were announced.

A version of this article appeared in the print edition of The Straits Times on February 08, 2017, with the headline 'SIA's Q3 net profit falls after Tigerair write-down'. Print Edition | Subscribe