United

SIA sees Q2 profit jump 73.9pc in ‘challenging’ market

Latest News
Saturday, 30 July 2016

Singapore’s SIA Group (comprised of Singapore Airlines, Tigerair, Scoot and Silk Air,SIA Engineering and SIA Cargo) has reported an operating profit of S$193 million in the April-June 2016 quarter, an improvement of S$82 million or 73.9 per cent year-on-year.
 


Group revenue declined S$79 million (-2.1 per cent) to S$3,654 million. Passenger flown revenue fell S$75 million (-2.6 per cent), mainly attributable to lower revenue from the parent airline company, partially compensated by an improved performance from Scoot and SilkAir on the back of growth in operations. Other passenger revenue increased by A$54 million (+21.4 per cent) largely due to a one-time credit on a change in the timing of recognising revenue from tickets that were not utilised, partially offset by the absence of income earned upon the release of seven aircraft delivery slots which was recorded last year.
 
Cargo revenue decreased S$60 million (-11.6 per cent) largely due to a 17.4 per cent contraction in cargo yield that was partially mitigated by 6.4 per cent growth in freight carriage (in load tonne -kilometres). Capacity increased by 4.8 per cent; consequently cargo load factor increased by 0.9 percentage points to 62.0 per cent. Expenditure declined by S$35 million mainly due to lower fuel costs. The reduction in expenditure could not fully compensate for the reduction in revenue and, consequently, SIA Cargo’s operating loss widened to S$34 million from S$9 million a year ago.
 
Group expenditure declined S$161 million (-4.4 per cent) to S$3,461 million. Net fuel cost fell S$357 million, arising from a 28 per cent drop in average jet fuel price.


(-S$287 million) and lower hedging loss (-S$122 million), partially offset by the strengthening of the US dollar against the Singapore Dollar (+S$6 million), and higher volume uplifted (+S$46 million). Ex-fuel costs rose by S$196 million, partly due to capacity expansion at SilkAir and Scoot, and the exchange impact of the stronger US dollar year-on-year.
 
Group net profit for the quarter was S$257 million, an improvement of S$166 million (+182.4 per cent) over last year. On top of a better operational performance (+S$82 million), the Group recorded higher non-operating income (+S$133 million). This was mainly due to SIA Engineering’s gain on divestment of its 10.0 per cent stake in Hong Kong Aero Engine Services Ltd (HAESL) (+S$142 million), coupled with S$36 million in special dividends received from HAESL following the sale of HAESL’s 20.0 per cent stake in Singapore Aero Engine Services. These were partially offset by a higher share of losses from Virgin Australia (-S$41 million), mainly due to restructuring costs.


During the April-June quarter, the parent airline company took delivery of three A350-900s, of which two aircraft entered into service, and removed one A330-300 from service in preparation for lease return. As at 30 June 2016, the operating fleet of the parent airline company comprised 103 passenger aircraft (54 777s, 27 A330-300s, 19 A380-800s and three A350-900s), with an average age of seven years and seven months.
SIA Cargo operated a fleet of nine 747-400 freighters as at 30 June 2016.


Route development
The parent airline company commenced new services to Dusseldorf from 21 July 2016. This will be followed by the launch of new services to Canberra and Wellington from 20 September 2016. In addition, it will launch non-stop daily flights between Singapore and San Francisco using A350-900s from 23 October 2016, and will add a second daily service to Los Angeles, in an expansion of its US operations. Services to Sao Paulo (via Barcelona) will be suspended and the last flight will be operated on 20 October 2016.


In addition, as part of the northern winter schedule, services to Adelaide, Christchurch and Kolkata will increase during peak periods, while seasonal services to Sapporo will be operated from 1 December 2016 to 5 January 2017.


Outlook
The business outlook for the parent airline company remains challenging amid economic weakness and geopolitical concerns in some markets. Competition remains intense with aggressive capacity injection and yields will continue to remain under pressure. Yields will be further diluted if key revenue-generating currencies depreciate against the Singapore dollar.


The cargo market remains soft, with economic uncertainty in Europe and China. Cargo yields are expected to remain under pressure as overcapacity persists in the industry.


The Group has hedged 37 per cent of its jet fuel requirements for the second quarter at a weighted average price of US$81 per barrel.

HACTL
Cathay Cargo
United

SIA sees Q2 profit jump 73.9pc in ‘challenging’ market

Latest News
Saturday, 30 July 2016

Singapore’s SIA Group (comprised of Singapore Airlines, Tigerair, Scoot and Silk Air,SIA Engineering and SIA Cargo) has reported an operating profit of S$193 million in the April-June 2016 quarter, an improvement of S$82 million or 73.9 per cent year-on-year.
 


Group revenue declined S$79 million (-2.1 per cent) to S$3,654 million. Passenger flown revenue fell S$75 million (-2.6 per cent), mainly attributable to lower revenue from the parent airline company, partially compensated by an improved performance from Scoot and SilkAir on the back of growth in operations. Other passenger revenue increased by A$54 million (+21.4 per cent) largely due to a one-time credit on a change in the timing of recognising revenue from tickets that were not utilised, partially offset by the absence of income earned upon the release of seven aircraft delivery slots which was recorded last year.
 
Cargo revenue decreased S$60 million (-11.6 per cent) largely due to a 17.4 per cent contraction in cargo yield that was partially mitigated by 6.4 per cent growth in freight carriage (in load tonne -kilometres). Capacity increased by 4.8 per cent; consequently cargo load factor increased by 0.9 percentage points to 62.0 per cent. Expenditure declined by S$35 million mainly due to lower fuel costs. The reduction in expenditure could not fully compensate for the reduction in revenue and, consequently, SIA Cargo’s operating loss widened to S$34 million from S$9 million a year ago.
 
Group expenditure declined S$161 million (-4.4 per cent) to S$3,461 million. Net fuel cost fell S$357 million, arising from a 28 per cent drop in average jet fuel price.


(-S$287 million) and lower hedging loss (-S$122 million), partially offset by the strengthening of the US dollar against the Singapore Dollar (+S$6 million), and higher volume uplifted (+S$46 million). Ex-fuel costs rose by S$196 million, partly due to capacity expansion at SilkAir and Scoot, and the exchange impact of the stronger US dollar year-on-year.
 
Group net profit for the quarter was S$257 million, an improvement of S$166 million (+182.4 per cent) over last year. On top of a better operational performance (+S$82 million), the Group recorded higher non-operating income (+S$133 million). This was mainly due to SIA Engineering’s gain on divestment of its 10.0 per cent stake in Hong Kong Aero Engine Services Ltd (HAESL) (+S$142 million), coupled with S$36 million in special dividends received from HAESL following the sale of HAESL’s 20.0 per cent stake in Singapore Aero Engine Services. These were partially offset by a higher share of losses from Virgin Australia (-S$41 million), mainly due to restructuring costs.


During the April-June quarter, the parent airline company took delivery of three A350-900s, of which two aircraft entered into service, and removed one A330-300 from service in preparation for lease return. As at 30 June 2016, the operating fleet of the parent airline company comprised 103 passenger aircraft (54 777s, 27 A330-300s, 19 A380-800s and three A350-900s), with an average age of seven years and seven months.
SIA Cargo operated a fleet of nine 747-400 freighters as at 30 June 2016.


Route development
The parent airline company commenced new services to Dusseldorf from 21 July 2016. This will be followed by the launch of new services to Canberra and Wellington from 20 September 2016. In addition, it will launch non-stop daily flights between Singapore and San Francisco using A350-900s from 23 October 2016, and will add a second daily service to Los Angeles, in an expansion of its US operations. Services to Sao Paulo (via Barcelona) will be suspended and the last flight will be operated on 20 October 2016.


In addition, as part of the northern winter schedule, services to Adelaide, Christchurch and Kolkata will increase during peak periods, while seasonal services to Sapporo will be operated from 1 December 2016 to 5 January 2017.


Outlook
The business outlook for the parent airline company remains challenging amid economic weakness and geopolitical concerns in some markets. Competition remains intense with aggressive capacity injection and yields will continue to remain under pressure. Yields will be further diluted if key revenue-generating currencies depreciate against the Singapore dollar.


The cargo market remains soft, with economic uncertainty in Europe and China. Cargo yields are expected to remain under pressure as overcapacity persists in the industry.


The Group has hedged 37 per cent of its jet fuel requirements for the second quarter at a weighted average price of US$81 per barrel.

HACTL
Cathay Cargo
HACTL
Cathay Cargo