Singapore Airlines third-quarter profit surges fourfold

GMT 15:57 2015 Friday ,06 February

Arab Today, arab today Singapore Airlines third-quarter profit surges fourfold

Singapore Airlines
Singapore - AFP

Singapore Airlines on Friday said its third-quarter net profit more than quadrupled, boosted by one-off gains from its absorption of struggling budget carrier Tiger Airways.
Net profit in the three months to December 31 surged to Sg$202.6 million ($150.6 million) from Sg$50.1 million a year ago.
"The improvement was primarily attributable to a Sg$56 million exceptional gain compared to an exceptional loss of Sg$80 million last year," the airline, known as SIA, said in a filing to the Singapore Exchange.
But the Asian carrier warned plummeting oil prices were not necessarily a boon for the aviation industry, predicting that the slump could herald a global economic slowdown.
SIA currently owns 55.8 percent of Tiger Airways after making annexing it as a subsidiary following after the Singapore-based low-cost carrier suffered heavy losses.
SIA's own third-quarter earnings last year were weighed down by a huge legal settlement in the United States.
But the airline said Tiger Airway's earnings boosted its own in the third quarter of this year by Sg$120 million.
Those gains offset a Sg$216 million fuel "hedging loss" after crude oil prices slumped by almost half from peaks in June.
Fuel costs rose 5.9 percent to Sg$1.49 billion for the quarter, despite the fall in crude prices.
"While the decline in oil prices is generally positive for the airline industry, hedging and competition will limit the effect on the group's earnings," SIA said.
"Moreover, falling oil prices may be a manifestation of a slowdown in global economic activity, which may ultimately have a negative effect on air travel demand."
The airline said revenue for the October-December quarter rose to Sg$4.10 billion, compared with Sg$3.88 billion a year ago, as passenger fares increased.
SIA, Asia's third-largest carrier by market value according to Bloomberg News, said advanced bookings for the January-March quarter were looking up "largely due to Chinese New Year demand".
"Competition remains intense, however, and efforts to stimulate demand in weaker markets will keep yields under pressure," it said.
But despite an improving performance from its frieght arm, SIA Cargo, "competitive pressure on yield is expected to continue due to excess capacity in the market."
SIA currently has 104 passenger aircraft, including 19 Airbus A380 superjumbos. Its network, along with regional wing SilkAir, reaches 99 cities in 35 countries.



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