Third quarter operating profit up 58% to $509 million

 Third quarter operating profit up 58% to $509 million

The Group made an operating profit of $509 million in the third quarter of the 2010-11 financial year, an increase of $186 million (+58%) over the same quarter last year.

Group revenue at $3,841 million grew $423 million (+12%) year-on-year, supported by continued improvement in carriage and yields.

On the cost side, Group expenditure rose $237 million (+8%) to $3,332 million. Expenditure on fuel before hedging increased $154 million owing to higher jet fuel prices.

Group net profit for the third quarter was $288 million, a decline of $116 million from the corresponding period a year earlier. In the quarter, a $199 million provision was made in accordance with the Singapore Financial Reporting Standards for fines imposed. While SIA Cargo has accepted the plea offer made by the United States Department of Justice, it has filed appeals against fines imposed by the European Commission and the South Korean Fair Trade Commission, and intends to contest these fines [see Note 2 below]. Excluding the fines, Group net profit improved by 21%.

The Parent Airline Company earned an operating profit of $378 million in the third quarter, $147 million more than in the same three months of the previous year. All the main companies in the Group were profitable, with improved operating
performance.

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SIA Cargo -  Operating profit of $48 million (+18%)
SilkAir -  Operating profit of $45 million (+93%)
SIA Engineering -  Operating profit of $34 million (+58%)

April to December 2010

For the nine months to December 2010, the Group recorded an operating profit of $1,105 million, a turnaround from the $178 million operating loss in the same period the previous year.

Group revenue improved 17% (+$1,567 million) to $10,938 million while
Group expenditure rose at a slower rate of 3% (+$283 million) to $9,833 million.

The Group recorded a net profit of $921 million for the April-December period, a turnaround from the net loss of $62 million in the same nine months of the previous year.

FLEET AND ROUTE DEVELOPMENT

During the October-December quarter, Singapore Airlines took delivery of two Airbus A330-300s and reinstated one Boeing 747-400 and one Boeing 777. As at 31 December 2010, the operating fleet comprised 109 passenger aircraft – eight B747- 400s, sixty-six B777s, nineteen A330-300s, eleven A380-800s and five A340-500s – with an average age of six years and two months.

Additional capacity was added during the quarter to popular destinations including Osaka, Seoul and Houston (via Moscow). Twice-daily services were also inaugurated to Tokyo Haneda airport.

OUTLOOK

As airlines including SIA continue to inject capacity, advance passenger bookings for the final quarter of the 2010-11 financial year are levelling off.

For air cargo, regional differences will continue to be marked in 2011 with strength in Asia Pacific and uncertainties in Europe markets. Growth for airfreight is expected to continue for the rest of the financial year, albeit at a slower rate.

On the cost side, jet fuel prices are at two year highs and trending up. Fuel remains the biggest expense item for the Group.