SIA profits up 40% despite declining revenue
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Singapore Airlines Group has posted a sharp rise in profits for the first half of its financial year, despite the fact that its revenues decreased.
The group’s operating profit for the six months to 30 September 2015 jumped 40.4% to SG$240 million (US$172m), while its net profit surged 142% to SG$305m. These results were achieved despite a 4.5% drop in revenue, to SG$7.24 billion.
Falling fuel costs were the main driver of SIA’s rising profits, as the group saved SG$1.16bn following a 41% drop in the average price of jet fuel compared to the same period in 2014. These savings were partially eroded however, by the fact that SIA hedged its fuel purchases at a higher-than-average price. In total, SIA’s group expenditure fell 5.7% to SG$6.99bn.
The main national carrier, Singapore Airlines, posted an operating profit of SG$206m in the first half of 2015, up 12.6% year-on-year, while SilkAir’s profits jumped 420% to SG$26m. Scoot halved its operating loss, to SG$22m, while Tiger Airways recorded a loss of SG$10m.
Despite the rising profits, SIA provided a cautious outlook for the remainder of the year, citing uncertain economic conditions and China’s slowing economy as potential areas of concern. It also noted that yields remain “under pressure”, due to extra capacity being added by rival airlines.
“Faced with these challenges, the group will maintain strict cost discipline,” SIA said. It added however, that it remains “well placed to retain its competitive edge”.
SIA’s airlines carried a total of 15.04 million passengers in the first half, up 1.4% year-on-year, while load factors averaged 80.0%, up half a percentage point.
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