Singapore Airlines second-quarter net profit more than doubles

Singapore Airlines (SIA) said Thursday its second quarter net profit more than doubled from last year, but warned about uncertainty due to an economic slowdown in emerging markets led by China.

Net profit for the three months to September soared 135 percent to Sg$213.6 million ($152 million), boosted in part by higher dividends from long-term investments, the carrier said in a statement.

Lower fuel expenses and an absence of share loss from associated companies after budget carrier Tiger Airways was classified as a subsidiary also helped lift earnings.

Tiger became a subsidiary last year after SIA raised its stake in the budget carrier from 40 per cent to nearly 56 per cent.

Group revenue for the quarter fell 1.5 percent to Sg$3.84 billion due to tougher competition in the passenger and cargo markets amid a sluggish global economy.

"Uncertainty in economic conditions persists, exacerbated by concerns about China's slowing economy which have led to weakening emerging market currencies and volatility in stock markets," SIA said.

"The outlook for both passenger and cargo traffic is cautious. Yields remain under pressure in the face of capacity additions from other airlines," it said.

"Advance passenger bookings for the October-December quarter are positive but mainly bolstered by promotional activities."
During the quarter, SIA carried 4.98 million passengers, slightly higher than 4.89 million a year earlier and filled 83.7 percent of seats, compared with 82.6 percent the year before but yields were lower.

Passenger yield, or money earned from carrying customers per kilometre, fell to 10.4 Singapore cents from 10.9 Singapore cents as more capacity was added, SIA said.

Freight yield fell to 29.9 Singapore cents from 33 Singapore cents despite the airline hauling more cargo during the quarter.

Benchmark oil prices have fallen by more than half from peaks of over $100 a barrel in June last year due to weak demand and a global crude oversupply which analysts expect to last well into next year.

Bloomberg data showed that average jet fuel prices in the July-September period fell 47 percent from a year ago to $61.23 a barrel in Singapore.

SIA shares closed 1.18 percent higher at Sg$11.15 Thursday before the earnings were released.