Singapore Airlines climbs 51%

The Singapore Airlines (SIA) Group has made an operating profit of $675 million in the third quarter of financial

year 2007-08, an increase of $227 million (+50.7%) from the same period of the immediately preceding financial year.

Growth in passenger carriage and yields produced Group revenue of $4,276 million; $482 million (+12.7%) higher compared to third quarter 2006-07.

On the cost side, Group expenditure increased $255 million (+7.6%), to $3,601 million. Fuel expenditure increased by $99 million (+8.0%) to $1,327 million as fuel prices climbed to new highs. Fuel cost accounted for 36.9% of the Group expenditure.

The parent airline Company posted an operating profit of $513 million (+67.6%), contributing 76.0% (+7.7% points) to the Group’s operating profit. The operating results of the three major subsidiary companies are as follows:

• Singapore Airlines Cargo (SIA Cargo): Profit of $73 million (+39.5%)

• Singapore Airport Terminal Services (SATS) Group: Profit of $47 million (+2.0%)

• SIA Engineering Company (SIAEC): Profit of $19 million (-27.9%)

For the first nine months of financial year 2007-08, the Group posted an operating profit of $1,656 million, a year-on-year improvement of $675 million (+68.9%). Group revenue grew $1,042 million (+9.6%) to $11,865 million, while Group expenditure increase was contained below revenue growth; up $367 million (+3.7%) to $10,209 million.

Singapore Airlines carried 4.96 million passengers in the 3rd quarter, 3.5% more than the preceding year. Passenger traffic (in revenue passenger kilometres) grew 2.7%, while capacity (in available seat kilometres) grew 2.0%, resulting in a 0.6 percentage point improvement in passenger load factor, to 81.3%.

Passenger breakeven load factor, at 67.7%, was 3.2 percentage points lower than the same period of the immediately preceding financial year, as passenger yield grew at a higher rate (+12.7%) than unit cost (+7.7%).

On the cargo side, SIA Cargo’s freight traffic (in load tonne kilometres) for the third quarter was down 2.6% year-on-year; about in line with the decline in cargo capacity (in capacity tonne kilometres) of 2.4%. As a result, cargo load factor declined marginally by 0.2 percentage point to 62.9%. However, cargo breakeven load factor at 57.9% was 2.4 percentage points lower on higher cargo yield (+2.8%) and lower unit cost (-1.3%), as a result of route rationalisation and cost control efforts.

During the third quarter, Singapore Airlines took delivery of its first Airbus A380-800 and its eleventh Boeing 777-300ER. Both new aircraft feature Singapore Airlines’ newest cabin products.

As at 31 December 2007, the operating fleet comprised 94 passenger aircraft – 19 B747-400s, 69 B777s, five A340-500s and one A380-800, with an average age of six years and seven months.

SIA Cargo commenced new freighter services from Brussels to Chicago and Los Angeles in November 2007.

In the last quarter of the current financial year, demand for air travel, as reflected in advance bookings, continues to be firm. Beyond the near term, however, the prospects are uncertain, with financial markets under stress and growing concerns about potential recession in America.

Pricing of futures indicates that oil prices will hold at current high levels, and expenditure on fuel will be partially mitigated by hedging and recovery of incremental costs from surcharges.

MREC HERE

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