SIA profit hints at recovery

SIA profit hints at recovery

Singapore Airlines has returned to profit in the final quarter of 2009, raising hopes of a recovery in the travel and tourism sector.

The Singapore Airlines Group returned to profitability in the last three months of 2009 with a net profit attributable to equity holders of $404 million. This was a turnaround from losses of $307 million in the first quarter and $159 million in the second quarter.

SIA is therefore likely to avoid making a full-year loss, despite having issued warnings in July that this was a possibility.

Group revenue at $3,418 million was $336 million (+10.9%) higher than the second quarter, while on the cost side, group expenditure fell $169 million (-5.2%) from the preceding quarter. The increase in jet fuel price led to a $34 million rise in fuel cost before hedging, although hedging losses were $146 million lower.

Savings in other areas, such as payroll costs, contributed a further $57 million. As a result, group operating profit for the quarter ended December 2009 was $323 million, in contrast to the operating loss of $182 million in the previous quarter.

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The company stated that “passenger loadings in January and bookings in hand indicate that the recovery in the third quarter is likely to continue in the final quarter of the current financial year.”

They added that the business outlook for the group in 2010 is “encouraging” but the company acknowledged that “uncertainties still linger over the global economy.”

Singapore Airlines flew 4.4 million passengers last quarter, down from 4.8 million a year earlier.