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Singapore Airlines Pre-Tax Profit Rises To $656m

Singapore Airlines Group Pre-Tax Profit Rises To $656m

· Operating profit was $510 million (+12.8%)
· Profit before tax was $656 million (+127.9%)
· Tax writeback of $278 million
· Profit attributable to shareholders was $774 million (+473.8%)
· Earnings per share was 63.5 cents (+472.1%)
· Shareholders’ funds amounted to $10,481 million (+6.4%)


At the halfway mark in the financial year, the Singapore Airlines (SIA) Group recorded an improved operating profit compared with the same period last year. The passenger airline company and two major subsidiary companies [Singapore Airport Terminal Services (SATS) Group and SIA Engineering Company (SIAEC) Group] had lower operating profits, but cargo operations, which turned profitable from a loss a year ago, contributed to the better results.

Said SIA Deputy Chairman and CEO Dr Cheong Choong Kong:

“We made full use of opportunities presented by a faster-than-expected recovery of the passenger and cargo markets post-September 11, 2001. Unfortunately, in an environment teeming with threats of war, whether we can continue to perform at the same level for the rest of the financial year rests largely on developments beyond our control. If there is any certainty it is that the SIA team will rise to the occasion.”

Note: The SIA Group’s unaudited financial results for the six months ended 30 September 2002 were announced on 25 October 2002. A summary of the financial and operating statistics, and cash flow statements for the period under review is shown in Annex 1. (All monetary figures are in Singapore Dollars. The Company refers to the parent airline unit, the Group comprises the Company and its subsidiary and associated companies).

Profit attributable to shareholders was $774 million, up 473.8% (+$639 million) over the same period last year. This included a tax writeback of $278 million due to the cut in corporate tax rate from 24.5% last year to 22%. Without the tax writeback, profit attributable to shareholders would have been $499 million (+269.8%).

The Group’s operating profit rose 12.8% (+$58 million) to $510 million. A large part of the improvement was due to cargo operations, which turned profitable from a loss the year before. Operating profit of the passenger airline company was $15.4 million lower (-5.7%). Two major subsidiary companies - SATS Group and SIAEC Group - also posted declines of 11.3% (-$16 million) and 16.0% (�$14 million) respectively. These declines in operating profit were due largely to provision for profit-sharing bonuses (No such bonuses were paid the year before). SilkAir contributed a higher profit (+$6 million).

Revenue was up by 10.5% (+$497 million) at $5,229 million. Expenditure grew 10.3% (+$440 million) to $4,719 million. Higher costs were incurred on staff, aircraft insurance premium, aircraft maintenance and overhaul, and aircraft depreciation. A provision for profit-sharing bonus was made (There was none the previous year).

Passenger carriage increased 4.8%, outpacing a 2.4% expansion in seat capacity. Passenger load factor improved to 76.8%, up 1.7 percentage points. Cargo carried grew 22.6% on the back of a 12.9% increase in capacity. Cargo load factor was 5.5 percentage points better, at 69.5%. Passenger yield declined 1.1%, while cargo yield was marginally higher by 0.3%.

The Group’s profit before tax was $656 million, up 127.9% or $368 million (The rise would be lower, at 25.0% or +$131 million, if exceptional items are excluded). The better results were due to:

(i) the surplus on disposal of aircraft, spare engines and spares which rose $32 million;

(ii) a higher share of profits of associated companies (+$76 million) principally because the Group no longer equity accounts the financial results of Air New Zealand (Air NZ). Increased contribution also came from Eagle Services Asia and Virgin Atlantic Limited; and (iii) a provision of $267 million in the previous year for diminution in value of the investment in Air NZ.

The Group’s basic earnings per share rose 52.4 cents (+472.1%) to 63.5 cents.


There was no buyback of the Company’s shares during the period under review.

On 2 July 2002, the Company made a fourth grant of share options to employees. 13,773,482 share options (99.9% of total options offered) were accepted by staff for exercise between 2 July 2003 and 1 July 2012.

In July 2002, the Company issued 1,000 shares upon exercise of options granted under the Employee Share Option Plan. As at 30 September 2002, there were 52,117,282 unexercised options under the Plan.


An interim dividend of 6 cents per ordinary share has been declared. The payment, net of tax of 22.0%, amounts to $57 million.


Shareholders’ funds of the Group stood at $10,481 million at 30 September 2002, up 6.4% (+$634 million) from 31 March 2002.

Net tangible assets per share for the Group was $8.60 at 30 September 2002, an improvement of $0.52 or 6.4% when compared to 31 March 2002.

The Group’s total assets increased $287 million (+1.5%) from 31 March 2002 to $18,868 million on 30 September 2002.

The net debt of the Group was $325 million at 30 September 2002, down $332 million (-50.5%) from 31 March 2002. Net debt equity ratio was 0.03 from 0.07 six months ago.


The average staff strength of the Company was 14,252, a reduction of 1.1% from the previous year (-165). Staff productivity, measured in terms of changes in seat capacity produced, passenger load carried, revenue earned and value added per employee, improved 3.4%.

At the Group level, staff strength rose only 0.6% (+170) to 29,793. Staff numbers grew in SIAEC Group (+245), SIA Cargo (+86), SilkAir (+57), SIA Mauritius (+51), Aviation Software Development (+35), and Singapore Flying College (+17). There were 166 fewer staff in the SATS Group. Group staff productivity, measured by revenue and value added per employee, increased 9.9% and 32.3% respectively.

By June 2002, SIA had restored services to USA and Japan that were suspended following the events of September 11. Concurrent with an improvement in the travel market, SIA launched a thrice-weekly service to Las Vegas, its sixth destination in the USA, in August 2002. The service is operated using B777-200ER (extended range) aircraft. To meet the improving demand on the Singapore-China routes, SIA increased its capacity to Beijing and Guangzhou using larger B777 aircraft. Frequencies to Shanghai were doubled from once to twice daily, also using B777s. A third daily flight will be added from the end of October 2002.

The larger B777s were used on services to Hanoi and Ho Chi Minh City thereby adding more capacity on the routes. A fifth weekly frequency will be added to Hanoi from December 2002. The opening of the second runway at Narita Airport in May 2002 enabled SIA to add three weekly flights to Tokyo, raising the total frequency to 20 flights a week.

Services to Australasia were also given a boost. Weekly frequencies were increased on the Brisbane service, from 10 to 12 a week from June 2002, while the number of flights to Christchurch, New Zealand, increased from three to five a week from August 2002. The Brisbane service will become twice daily from the end of October 2002.

In the West Asia region, three weekly B777 flights were added to Dubai from June 2002, making a total of 10 flights a week. Services to Nepal and Pakistan were suspended in May and June 2002 due to the difficult operating conditions. SIA’s services to South Africa will be restructured shortly, and from December 2002, Johannesburg will be served by a daily non-stop B777ER operation. Three of the seven flights will be extended to Cape Town, while the Durban service will be terminated. The Mauritius service will increase from one to two per week, also using B777ERs.

The new SpaceBed Business Class product - dubbed the biggest Business Class bed in the sky -- was launched on the London service at the end of May 2002. The programme to retrofit SpaceBeds on the B744 and B777ER fleet is being carried out progressively and will be completed by July 2003.

As at 30 September, SIA Cargo's fleet stood at eleven aircraft. In February 2003, another freighter will be added to the fleet. This freighter will be deployed to Europe, USA and Australia.

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