By BLOOMBERG
Singapore Airlines Ltd, Southeast Asia’s biggest carrier, posted a profit that more than doubled after adding a budget carrier’s earnings into its own account.
Nett income jumped to S$213.6 million (RM651.81 million) in the quarter ended September, from S$90.9 million a year earlier, Singapore Airlines said in a statement on Thursday.
Analysts were expecting S$157.3 million, according to the average of three estimates compiled by Bloomberg. Sales dropped 1.5% to S$3.84 billion.
Profit jumped in the July-September quarter when earnings of subsidiary Tiger Airways Holdings Ltd were included, Singapore Airlines said.
Chief executive officer Goh Choon Phong has ordered new planes, is adding premium economy-class seats and has formed ventures in Australia and India to counter mounting competition from budget airlines and Middle Eastern carriers.
The slump in oil prices over the past year has made air fares cheaper, encouraging more people to travel.
“They have been cutting capacity,” said K Ajith, an analyst at UOB Kay Hian Pte Ltd in Singapore. “The question is to what extent the improvement in loads will offset by lower yields. Airlines have been filling seats at the expense of yields, and this trend will likely continue.”
Singapore Airlines’ shares rose 1.2% to close at S$11.15 before the earnings announcement. Seven of 18 analysts recommend investors “buy” the stock, according to data compiled by Bloomberg. Nine say “hold” and two have a “sell” rating.
“Yields remain under pressure in the face of capacity additions from other airlines,” Singapore Airlines said in the statement. “Advance passenger bookings for the October-December quarter are positive, but mainly bolstered by promotional activities.”
The airline carried 4.98 million passengers in the quarter, slightly higher than 4.89 million a year earlier. It filled 83.7% of seats in the three-month period, compared with 81.9% a year ago.
Singapore Airlines hauled 282.5 million kg of cargo in the July-September period, up from 277.1 million kg a year ago. It filled 60.3% of cargo space on its planes, compared with 62% a year earlier.
Passenger yield, or money earned from carrying travellers each kilometre, fell to 10.4 Singapore cents from 10.9 Singapore cents a year earlier as more capacity was added, the airline said. Cargo yield dropped to 29.9 Singapore cents from 33 Singapore cents.
Savings from lower fuel prices were partially offset by hedging losses, the company said. The airline hedged 50.7% of its fuel needs for the six months to March at an average price of US$93 per barrel.
Average jet fuel prices in the July-September period fell 47% from a year ago to US$61.23 a barrel in Singapore, according to data compiled by Bloomberg. The price closed 1.8% higher at US$60.57 on Wednesday.
Singapore Airlines is planning to revive the world’s longest flight – a 19-hour service to New York that it discontinued in 2013 – using an ultra-long range version of Airbus Group SE’s A350 that will be delivered in 2018. The airline ordered seven of the planes for the nonstop flight.
The carrier also is enhancing cooperation between its two budget units. Members of Singapore Airlines’ mileage programme, KrisFlyer, can earn miles when they fly on low-fare subsidiaries Scoot and Tigerair.
— By Kyunghee Park
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