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An operating profit of $982 million for the first half of financial year 2007-08 was reported by the Singapore Airlines Group; an increase of $449 million (+84.1%) from the corresponding period last year. This was underpinned by strong performance from the Parent Airline Company.
Group revenue rose to $7,589 million, up $560 million (+8.0%) over the same period last year, on the back of strong passenger demand.
Group expenditure also increased, but was contained below revenue growth; up $111 million (+1.7%) to $6,607 million. Fuel cost remained high in US Dollars, and accounted for 36.5% of the Group expenditure.
The Group’s net profit attributable to equity holders of $932 million was a $64 million improvement (+7.3%) over the first half of the previous year. The results for last year included an exceptional gain of $223 million from the sale of the SIA Building in Singapore. Excluding that exceptional gain, profit attributable to equity holders this year was $287 million (+44.5%) higher.
The Parent Airline Company posted an operating profit of $781 million (+112.2%), more than double the same period last year. The Airline contributed 79.6% (+10.6% points) to the Group’s operating profit. The operating results of the three major subsidiary companies are as follows:
Singapore Airport Terminal Services (SATS) Group: Profit of $94 million (-3.8%) SIA Engineering Company (SIAEC): Profit of $63 million (-6.6%) Singapore Airlines Cargo (SIA Cargo): Profit of $19 million (Loss of $29 million in 2006-07)
Second Quarter 2007-08
The Group had a strong second quarter, posting a net profit attributable to equity holders of $508 million, up $215 million (+73.2%) from the second quarter of the previous year.
Group operating profit doubled to $519 million; a year-on-year increase of $259 million (+99.9%), led by the Parent Airline Company, turning in a strong performance in the second quarter.
Group revenue increased $359 million (+9.9%) year-on-year to $3,967 million. Passenger demand from both business and leisure markets remained buoyant in the second quarter, pushing passenger load factor to 81.6%.
Dividends
The Company is declaring an interim dividend of 20 cents per share (tax exempt, one-tier), amounting to $237 million, for the half-year ended 30 September 2007 (15 cents interim dividend in the previous year). The interim dividend will be paid on 30 November 2007 to members on the Register as at 16 November 2007.
First half 2007-08 operating performance: Strong passenger traffic
Singapore Airlines carried 9.4 million passengers (+5.0%) in the first six months of the financial year. Revenue passenger kilometres grew 2.6% despite a capacity reduction of 1.0% in available seat kilometres. As a result, passenger load factor improved 2.8 percentage points to 80.3%.
Passenger breakeven load factor was 2.8 percentage points lower, at 70.1%, because yield grew at a higher rate (+9.3%) than unit cost (+5.1%).
Fleet and Route development
During the first half of the financial year, Singapore Airlines took delivery of one Boeing 777-300ER, leased in one Boeing 747-400, and de-commissioned four Boeing 747-400s. As at 30 September 2007, the operating fleet comprised 92 passenger aircraft – 19 B747-400s, 68 B777s and five A340-500s, with an average age of six years and six months.
Outlook
Singapore Airlines took delivery of the first Airbus A380 on 15 October 2007 and inaugurated commercial service with a flight in aid of charity on 25 October 2007 from Singapore to Sydney and return. The new cabins and seats on the aircraft have been well received by customers and industry observers.
The business landscape however remains challenging. While advanced bookings are holding up, slowing economic growth sparked by tight credit markets and increasing volatility in financial markets cast a cloud of uncertainty over the strong revenue environment.
On the cost side, the price of fuel remains a significant variable for the second half of the financial year.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales. She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
