SINGAPORE (July 27): Singapore Airlines (SIA) posts group earnings of $235.1 million for 1Q ended June, down 8.4% from earnings of $256.6 million a year ago.
This was mainly attributable to the absence of last year’s gain on SIA Engineering’s divestment of its 10.0% stake in Hong Kong Aero Engine Services (HAESL) and special dividends of $178 million received from HAESL.
The decline was partially mitigated by an $88 million increase in group operating profit, and a $47 million decrease in share of losses from associated companies.
Group revenue climbed 5.6% to $3.86 billion in 1Q, from $3.66 billion a year ago, on the back of improved revenue across all SIA Group airlines.
However, in a filing to SGX on Thursday, SIA says pressure on yields remains.
Passenger yields fell 3.1% in 1Q, but was outpaced by a 7.6% increase in traffic. As a result, passenger flown revenue increased by 4.3% to $121 million.
Cargo revenue was up $57 million as freight carriage was 6.9% higher. This was further supported by yield improvement of 4.8%.
Group expenditure increased by 3.4% to $3.58 billion.
Net fuel costs rose 3.4% to $925.7 million, mainly due to higher average jet fuel prices. Ex-fuel costs also increased by 3.4%, partly attributable to the enlarged operations of SilkAir and Budget Aviation Holdings.
For 2Q, the group has hedged 41.9% of its fuel requirements at a weighted average price of US$63 per barrel.
Cash and cash equivalents stood at $2.94 billion as at June 30, 2017.
Looking ahead, SIA says the business outlook for the airline industry remains challenging.
“The group will continue to take delivery of modern and fuel-efficient aircraft to further expand its network and enhance its competitiveness in both the full-service and low-cost market segments,” it says. “The group’s transformation programme is also ongoing, to identify new opportunities for revenue generation, and to re-structure its cost base.”
Shares of SIA closed 2 cents higher at $10.15 on Thursday.
