SIA made an operating profit of $675 million (£240 million) in the third quarter of financial year 2007-08, an increase of $227 million (£80 million) (+50.7%) from the same period of the immediately preceding financial year.Growth in passenger carriage and yields produced Group revenue of $4,276 million (£1,518 million); $482 million (£171 million) (+12.7%) higher compared to third quarter 2006-07.
On the cost side, Group expenditure increased $255 million (£91 million) (+7.6%), to $3,601 million (£1,279 million). Fuel expenditure increased by $99 million (£35 million) (+8.0%) to $1,327 million (£487 million) as fuel prices climbed to new highs. Fuel cost accounted for 36.9% of the Group expenditure.
Net profit attributable to equity holders for the third quarter was $590 million (£210 million), comparable to the same period of the immediately preceding financial year. The results for October to December 2006, however, included a $198 million (£70 million) one-off gain from the sale of the Group’s 35.5% equity stake in Singapore Aircraft Leasing Enterprise. Excluding that exceptional gain, profit attributable to equity holders this year was $199 million (£71 million) (+50.7%) more.
The Parent Airline Company posted an operating profit of $513 million (£182 million) (+67.6%), contributing 76.0% (+7.7% points) to the Group’s operating profit. The operating results of the three major subsidiary companies are as follows:
á Singapore Airlines Cargo (SIA Cargo): Profit of $73 million (£26 million) (+39.5%)
á Singapore Airport Terminal Services (SATS) Group: Profit of $47 million (£17 million) (+2.0%)
á SIA Engineering Company (SIAEC): Profit of $19 million (£7 million) (-27.9%)
April - December 2007
For the first nine months of financial year 2007-08, the Group posted an operating profit of $1,656 million (£588 million), a year-on-year improvement of $675 million (£240 million) (+68.9%).
Group revenue grew $1,042 million (£370 million) (+9.6%) to $11,865 million (4,213 million), while Group expenditure increase was contained below revenue growth; up $367 million (£130 million) (+3.7%) to $10,209 million (£3,621 million).
The Group earned a net profit attributable to equity holders of $1,522 million (£540 million) for the nine months ended 31 December 2007, compared to $1,458 million (£517 million) in the same period of the immediately preceding financial year. Excluding exceptional gains of $421 million (£149 million) from the sale of the SIA Building in Singapore and sale of the Group’s equity stake in Singapore Aircraft Leasing Enterprise from the previous year’s results, net profit attributable to equity holders this year was $485 million (£172 million) (+46.8%) higher.
THIRD QUARTER OPERATING PERFORMANCE
Singapore Airlines carried 4.96 million passengers in the quarter, 3.5% more than the preceding year. Passenger traffic (in revenue passenger kilometres) grew 2.7%, while capacity (in available seat kilometres) grew 2.0%, resulting in a 0.6 percentage point improvement in passenger load factor, to 81.3%.
Passenger breakeven load factor, at 67.7%, was 3.2 percentage points lower than the same period of the immediately preceding financial year, as passenger yield grew at a higher rate (+12.7%) than unit cost (+7.7%).
On the cargo side, SIA Cargo’s freight traffic (in load tonne kilometres) for the third quarter was down 2.6% year-on-year; about in line with the decline in cargo capacity (in capacity tonne kilometres) of 2.4%. As a result, cargo load factor declined marginally by 0.2 percentage point to 62.9%. However, cargo breakeven load factor at 57.9% was 2.4 percentage points lower on higher cargo yield (+2.8%) and lower unit cost (-1.3%), as a result of route rationalisation and cost control efforts.
FLEET AND ROUTE DEVELOPMENT
During the third quarter, Singapore Airlines took delivery of its first Airbus A380-800 and its eleventh Boeing 777-300ER. Both new aircraft feature Singapore Airlines’ newest cabin products. The new cabins and seats on the aircraft have been well received by customers.
As at 31 December 2007, the operating fleet comprised 94 passenger aircraft - 19 B747-400s, 69 B777s, five A340-500s and one A380-800, with an average age of six years and seven months.
SIA Cargo commenced new freighter services from Brussels to Chicago and Los Angeles in November 2007.
In the last quarter of the current financial year, demand for air travel, as reflected in advance bookings, continues to be firm. Beyond the near term, however, the prospects are uncertain, with financial markets under stress and growing concerns about potential recession in America.
Pricing of futures indicates that oil prices will hold at current high levels, and expenditure on fuel will be partially mitigated by hedging and recovery of incremental costs from surcharges.