Singapore Airlines Returns to Profitability

The Singapore Airlines Group returned to profitability in the third quarter of the financial year 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.

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.

The Parent Airline Company recorded an operating profit of $231 million in the third quarter, against an operating loss of $157 million in the previous quarter, from a combination of higher revenue (+$335 million or +13.7%) on continued recovery in load factors and yields, and lower losses from fuel hedging (-$120 million).

All the main companies in the group were profitable in the quarter:

• Singapore Airlines Operating profit of $ 231 million (profit of $314 million in 2008)
• SIA Cargo Operating profit of $ 40 million (loss of $46 million in 2008)
• SilkAir Operating profit of $ 23 million (profit of $12 million in 2008)
• SIA Engineering Operating profit of $ 22 million (profit of $29 million in 2008)

Including non-operating items and taxes, the group net profit attributable to equity holders for the third quarter of $404 million is $67 million higher than the same quarter last year. With this result, the net loss attributable to equity holders for the nine-month period of the financial year has narrowed to $62 million, from the $466 million loss recorded in the first half.

Fleet / Routes

The company decommissioned one Boeing 747-400 and one Boeing 777 during the quarter. As at 31 December 2009, the operating fleet comprised 107 passenger aircraft – eight B747-400s, seventy-six B777s, ten A380-800s, eight A330-300s and five A340-500s – with an average age of 6 years and 3 months.

 During the quarter, there were increased frequencies to Auckland, Christchurch, Brisbane, Perth, Manchester, Rome and Houston (via Moscow), and since 19 January 2010 the non-stop all-Business Class service to Newark has returned to daily operations. On the other hand, flights to Athens and Dubai were reduced during the quarter, and services to Pakistan and Nanjing will be suspended with effect from February 2010 and March 2010, respectively. From late March, Munich will be added to the SIA network, and the A380 will be deployed to Zurich.

Outlook

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. The improvement in yields is also holding up. Although air cargo shows similar improvement, it is more tentative because of the excess of freighter capacity and the unidirectional nature of cargo flows. The business outlook for the group in 2010 is encouraging but the company acknowledged that uncertainties still linger over the global economy.

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