Singapore Airlines first quarter operating profit rises to $281 Million
The SIA Group reported an operating profit of $281 million in the April-June 2017 quarter, $88 million or 45.6% higher compared with the same period last year.
Group revenue rose $206 million year-on-year to $3,864 million (+5.6%). Excluding one-off items in both financial years, Group revenue increased year-on-year by $184 million (+5.2%), and Group operating profit rose by $66 million from $42 million to $108 million.
Passenger flown revenue contributed $121 million (+4.3%) on increased traffic (+7.6%), outstripping the reduction in passenger yield (-3.1%). Cargo revenue was up $57 million on higher freight carriage (+6.9%), further supported by yield improvement of 4.8%. Other revenue was stable, as the absence of the adjustment upon up-front revenue recognition for unutilised tickets recorded in the last financial year ($151 million) was mitigated by revenue adjustments from the KrisFlyer programme ($115 million) [See Note 2] and further recognition of compensation for changes in aircraft delivery slots ($58 million).
Group expenditure increased $118 million to $3,583 million (+3.4%). Net fuel costs rose by $30 million (+3.4%), as a $115 million reduction in fuel hedging loss partially offset the $145 million increase in fuel cost before hedging, caused mainly by higher average jet fuel prices. Ex-fuel costs were up $88 million (+3.4), partly attributable to the enlarged operations of SilkAir and Budget Aviation Holdings, the parent company of Scoot and Tiger Airways.
Group net profit for the quarter was $235 million, down $22 million (-8.6%) from last year. However, the deterioration was attributable to the absence of last year’s gain on SIA Engineering’s divestment of its 10.0% stake in Hong Kong Aero Engine Services Ltd (HAESL) and special dividends received from HAESL (-$178 million), partially offset by higher Group operating profit (+$88 million), and lower share of losses from associated companies (+$47 million).
Operating profit for the Parent Airline Company rose $44 million or 22.3% year-on-year. Total revenue increased $71 million, mainly driven by a $62 million (+2.7%) improvement in passenger flown revenue. Other revenue was higher, supported by KrisFlyer revenue adjustments and compensation for changes in aircraft delivery slots, partially negated by the absence of the adjustment upon up-front revenue recognition on unutilised tickets made in the first quarter of last year. The stronger passenger flown revenue was attributable to 4.7% growth in passenger carriage (measured in revenue passenger-kilometres), partially offset by 1.9% yield contraction. Passenger load factor increased 4.2 percentage points to 80.0%, as capacity (measured in available seat-kilometres) fell by 0.8%. Expenditure was up $27 million (+1.0%) on higher net fuel cost, landing, parking and handling charges.
SilkAir reported a $20 million deterioration in operating performance compared with the same period last year. Total revenue was marginally higher (+$2 million or 0.8%), as growth in passenger carriage of 13.8% was largely offset by an 8.6% decline in yield. Expenditure, on the other hand, increased $22 million as the 11.6% expansion in operations led to higher operating costs such as maintenance and fuel costs. Passenger load factor rose 1.5 percentage points year-on-year to 71.6%.
Budget Aviation Holdings recorded an operating profit of $3 million, declining $6 million compared to the same period last year. Total revenue grew $49 million (+15.8%) from 18.2% growth in passenger carriage, but this was overtaken by a $55 million (+18.3%) increase in expenditure on the back of 16.5% capacity growth. Yield was 1.7% lower, while passenger load factor rose 1.2 percentage points to 84.0%.