SINGAPORE, May 12 — Singapore Airlines Ltd (SIA) reported its full-year net profit more than doubled to S$804 million (RM2.3 billion), better than analysts’ expectations, mainly on lower oil costs.
Operating profit increased 66.1 per cent to S$271 million, the airline said in a stock exchange filing today.
The carrier, a barometer of the health of Asia’s competitive airline industry, said that lower net fuel costs compensated for weaker yields but warned of difficult conditions ahead.
“The Group is contending with a challenging operating environment in key markets, caused in part by weak economic activity and relatively rapid growth in capacity, evidenced by increasing promotional fare activity,” it said.
The SIA group operates a full-service flagship carrier, two low-cost subsidiaries and a cargo unit.
The carrier said its bottom line was buoyed by a one-off S$117 million refund to its cargo subsidiary, and profits at its low-cost units Scoot and Tigerair.
Analysts had expected net profit of S$766.7 million for the full year, according to the average estimate of 15 analysts polled by Thomson Reuters I/B/E/S.
Net income for the fourth quarter was S$224.7 million, up S$184 million from the year before.
Full-year group revenue was S$15.23 billion, down 2.2 per cent on lower passenger revenues at the parent airline business and the cargo division.
Expenditure fell S$609 million, or 4 per cent, to S$14.55 billion, with fuel costs declining by S$1.05 billion due to a drop in fuel prices, SIA said.
Airlines around the world have reaped the benefits of a 30 per cent drop in jet fuel prices over the last year.
The main SIA brand’s operating profits were up 42 per cent at S$485 million. Scoot posted a profit of S$28 million, reversing a loss of S$67 million, and short-haul budget unit Tigerair posted a profit of S$14 million versus a loss of S$9 million.
SIA Cargo remained a drag on the company with a loss of S$50 million, worse than a S$22 million loss the year before, reflecting a broader weakness in the global air freight market.
The company’s business hinges on using its hub at Singapore’s Changi Airport to connect passengers within Asia and to Europe, Australia and the United States.
Profitability of Asia-European services have been under pressure since the 2008 financial crisis due to tepid economic growth in the continent, and competition from Gulf carriers that have taken market share from legacy airlines in both continents.
SIA cautioned that the outlook remains cautious for air cargo amid China’s economic slowdown and ongoing uncertainty surrounding the global economy. — Reuters
