SIA: Group financial performance for first half 2011-12
The Group made a net profit of $ 239 million of Singapore in the first half of the 2011-12 financial year. This was $394 million (-62%) lower than the same period a year ago, principally on account of high fuel costs. Operating profit declined to $134 million, $462 million (-78%) lower than the first half of the previous financial year.
Group revenue grew $180 million (+3%) to $7,277 million, supported by higher passenger carriage and flat yields, despite increased competition and weak business sentiment.
Group expenditure at $7,143 million was higher by $642 million (+10%). Expenditure on fuel increased $747 million (+35%) as jet fuel prices spiked 45% over the same period last year. This was partially offset by a $118 million year-on-year improvement in fuel hedging.
All the main companies in the Group recorded weaker operating results for the first half of the financial year. The operating profit of the Parent Airline Company fell $327 million (-86%), owing to higher fuel expenditure which increased $643 million (+37%) to $2,384 million. With stringent cost discipline, passenger unit cost excluding fuel declined 7%.
The operating results of the main companies in the Group for the first half of the financial year are as follows:
– Parent Airline Company Operating profit of $53 million ($380 million profit in 2010)
– SIA Engineering Operating profit of $69 million ($71 million profit in 2010)
– SilkAir Operating profit of $34 million ($36 million profit in 2010)
– SIA Cargo Operating loss of $31 million ($102 million profit in 2010)
Fleeet and route development
The Parent Airline Company took delivery of three A-380/800s, decommissioned four B-747/400 aircraft (three sold and one in preparation for sale) and returned one B-777/300 airplane on expiry of the lease in the first half of the financial year. As at 30 September 2011, the operating fleet of the Parent Airline Company comprised 106 passenger models –three B-747/400s, 65 B-777s, 19 A-330/300s, 14 A-380/800s and five A-340/500s– with an average age of 6 years 4 months.
As at 30 September 2011, SIA Cargo operated a fleet of 13 B-747/400 freighter aircraft, while SilkAir’s operating fleet comprised 19 aircraft –13 A-320/200s and six A-319/100s.
Capacity continues to be adjusted to match demand across the Group. In the first six months of the financial year, the Parent Airline Company added capacity to growth areas, such as Hong Kong, Guangzhou, Taipei, Mumbai and Jakarta, while the non-stop service to Los Angeles was scaled back. SilkAir launched services to Kolkata, complementing the Parent Airline Company’s flights to the city, and commenced flights to Koh Samui.
Outlook
The prevailing economic uncertainty and weak consumer confidence are impacting demand for air transportation. Advance passenger bookings are showing signs of weakness, particularly in Europe and the United States. Global Purchasing Manager Indices have also fallen, pointing to weaker demand for air freight. Both passenger and cargo yields are therefore expected to remain under pressure.
Exacerbating the impact of the weak outlook is the high cost of fuel, which is compounded by the recent strength in the US dollar. Forward prices for jet fuel remain high and volatile.
The Group has a strong balance sheet and in this difficult operating environment, will monitor and respond appropriately to changing business trends and continue to exercise tight cost control.
(Avionews)
