Singapore Airlines posted a better than expected S$78 million net profit for the April-June quarter, but saw yields slip and warned on the outlook for cargo.
Net profits were up 73% on the same period for 2011 (which saw the Japanese earthquake) but still well below the $$253 achieved two years ago. Group operating profit of S$72 million improved S$61 million, year-on-year. Group revenue grew 6% (+S$200 million) to S$3,777 million, bolstered by a 9.6% improvement in passenger volumes. Analysts polled by Reuters had expected net profits of S$70 million.
This was partly at the expense of yields, however. "This traffic growth was driven by promotions undertaken to boost loads, amid intense competition and weak business sentiment," says SIA. "As a result, yields declined 3% from the same period in the previous financial year." Promotion was mainly on European and US routes.
Expenditure at S$3,705 million was up 4%. "Although jet fuel prices retreated, fuel cost before hedging was nonetheless 2% higher against last year, mainly attributable to increased fuel uplift due to the 4.3% capacity growth. Staff costs were higher mainly due to increased activities, and wage adjustments following the conclusion of collective agreements with the Unions. Other variable costs also rose in line with the increase in capacity," says the carrier.
Cargo remained weak, with the cargo division seeing an operating loss of S$35 million. "Forward indicators for air freight signal a weak outlook for the cargo business. SIA Cargo faces pressure with respect to both demand and yields."