For 2HFY19, SIA has hedged 58% of its fuel requirements in jet fuel at a weighted average price of US$71, against the current MOPS price of US$87. For FY20, 52% is hedged with 17% at US$79 on average for jet fuel) and 35% at US$56 on average for Brent.
To recap, SIA reported a 5.6% y-o-y rise in revenue to $4.1 billion in 2Q19 and net profit of $56.4 million, impacted by $117.1 million share of losses of associated companies. This was mainly due to the recognition of SIA’s share of loss from Virgin Australia.
Singapore Airlines 2Q earnings fall 81% to $56.4 mil on higher fuel prices
Operating profit was 44% y-o-y lower and if one-off items were to be excluded, it would be 27% lower, mainly due to higher fuel costs.
Flown revenue rose by $422 million, contributed by higher passenger flown revenue and cargo flown revenue. Passenger flown revenue, passenger load factor and passenger unit revenue all grew.
SIA declared an interim dividend of $0.08/share.
OCBC is maintaining its “buy” for SIA with fair value estimate of $10.71 or 0.85 times forward P/B.
Year to date, shares in SIA are down 12.1% to $9.38.
See also: Singapore Air gets four 'hold' calls in wake of weak 2Q results
