SIA nearly triples Q1 profit as fuel prices fall

SINGAPORE — Flag carrier Singapore Airlines on Thursday (July 28) reported fiscal first-quarter profit almost tripled even as revenue fell, with its bottom-line boosted by lower fuel costs and a one-off gain from the sale of a stake in a Hong Kong company. However, it warned of challenging times ahead amid economic weakness and geopolitical concerns in some markets.

Net income rose to S$256.6 million in the three months ended June 30, up 181.4 per cent from the S$91.2 million in the corresponding period a year earlier, SIA said in an after-market filing with the Singapore Exchange.

Revenue dropped 2.1 per cent to S$3.65 billion during the period, due to lower takings from the parent airline that were partly offset the improved performances of Scoot and SilkAir. 

Expenditure declined 4.4 per cent to S$3.5 billion.

A more than 50 per cent decline in oil prices in the past two years has helped reduce costs for most airlines, whose single biggest expense is jet fuel. Benchmark Brent crude traded at an average of US$46.91 (S$63.43) a barrel in the three months through June, 26 per cent lower than the US$63.37 a year earlier. It traded at US$43.24 a barrel late in Singapore on Thursday.

Non-operating income surged to S$148.1 million from S$6.8 million previously as its unit, SIA Engineering, gained from its stake sale in Hong Kong Aero Engine Services (HAESL), as well as bagging S$36 million in special dividends from the Hong Kong company. SIA Engineering divested its 10 per cent stake in HAESL.

“Competition remains intense with aggressive capacity injection, and yields will continue to remain under pressure. Yields will be further diluted if key revenue-generating currencies depreciate against the Singapore dollar,” the airline warned on Thursday. WITH AGENCIES