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Second Quarter Loss Narrows to SG $159 Million


GROUP FINANCIAL PERFORMANCE


The Group (Singapore Airlines its subsidiary, joint venture and associated companies) recorded a net loss attributable to equity holders of SG$159 million (NZ$146.73 million) for the second quarter of the financial year. This was an improvement of $148 million from the first quarter’s net loss of $307 million.


Group revenue for the second quarter at $3,082 million (NZ$2,844.22 million) increased by $210 million (NZ$193.80 million), (+7.3%) from the previous quarter.


Expenditure was up $73 million (+2.3%) quarter-on-quarter due mainly to the increase in jet fuel prices. Fuel costs ex-hedging for the second quarter at $942 million was $202 million higher than the previous quarter, while losses from fuel hedging fell $87 million to $200 million. This was partially offset by lower payrolls and cost savings in other non-fuel expenditure.


As a result, the Group posted an operating loss of $182 million for the second quarter, less than the $319 million loss in the first quarter.


The parent airline company turned in an operating loss of $157 million for the second quarter. This was $114 million less than the loss in the previous quarter, reflecting improvement in load factors, but also deterioration in yields. Consequently, operating loss for the half year was $428 million, including fuel hedging loss of $400 million.


The operating results of the main companies in the Group for the half year are as follows*:


* Singapore Airlines operating loss of $428 million (profit of $495 million in 2008)


* SIA Engineering operating profit of $47 million (profit of $57 million in 2008)


* SIA Cargo operating loss of $193 million (loss of $76 million in 2008)


* SilkAir operating loss of $5 million (profit of $5 million in 2008)


* SATS Group ceased to be a subsidiary of the Group with effect from 1 September 2009. SATS


Group contributed $71 million to the Group operating profit for the period from 1 April 2009 to


31 August 2009.


Including non-operating items and taxes, the Group net loss attributable to equity holders for the first half of the financial year was $466 million, against a profit of $682 million a year ago.


FLEET AND ROUTE DEVELOPMENT


In the first half of the financial year, Singapore Airlines took delivery of four Airbus A380-800s and four Airbus A330-300s, and decommissioned three Boeing B747-400s. As at 30 September 2009, the operating fleet comprised 109 passenger aircraft – nine B747-400s, 77 B777s, ten A380-800s, eight A330-300s and five A340-500s – with an average age of 6 years and 1 month.


The company has been adjusting capacity to match reduced demand. The unprofitable service to Vancouver via Seoul was discontinued from April 2009, while services to Moscow via Dubai and Tokyo via Bangkok were suspended from July 2009 and August 2009 respectively. Frequencies to Manchester, Zurich, Guangzhou, Dubai, Colombo, Dhaka, Mumbai and New Delhi were scaled back during the half year. On the other hand, more flights to Manila were added and the A380 was deployed to Paris, Hong Kong and Melbourne.


For the Northern Winter schedule, flight frequencies will continue to be adjusted to match seasonal demand.


INTERIM DIVIDEND


No interim dividend is being declared because of the losses in the half year.


OUTLOOK


Advance bookings indicate that demand for air travel has stopped declining and is gradually recovering. The capacity programmed for the remainder of the year appears well matched to the demand. The market conditions allow for some rollback of promotional pricing but yields are unlikely to get back to pre-crisis levels within the next six months.


For the October – March half of the company’s current financial year, hedges had been contracted for 3.5 million barrels of jet fuel, or approximately 20% of projected uplift, at an average of US$100 per barrel. If the recent rise in price of fuel does not retreat, hedging losses will be reduced, but conversely operating cost will be higher.


The cooperation of the employees and the unions on measures necessary to contain costs has assisted the company to navigate the global economic downturn so far. The directors and the management recognise the sacrifices made by staff and are confident that with their continued support, the company will emerge stronger from the recession.


ENDS

© Scoop Media

 
 
 
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