Singapore Airlines’ Q1 profit masks operating performance


Singapore Airlines (SIA) reported a net profit of S$122 million (US$96.5 million) for the first quarter (Apr-Jun) of its current financial year. This is a dramatic rise of 56 per cent compared to the same quarter last year. However, the result masks the operating performance of the airline as the improvement was mainly due to gains from the sale of aircraft and exceptional items, including a net gain of $336 million from the sale of its 49-per-cent stake in Virgin Atlantic to Delta Airlines. The Virgin stake by itself was sold at a loss, after more than a decade of holding on to the lacklustre investment.

With the exception of SIA Cargo, which continues to incur losses ($40 million), the other entities of SIA the airline, regional carrier SilkAir and SIA Engineering reported positive results. Only SIA the airline showed an increase of under five per cent from $85 million to $89 million; SilkAir and SIA Engineering saw reduced profits by 22 per cent and 18 per cent respectively. For both SIA and SilkAir, passenger growth lagged behind capacity growth.

In a statement that it released, SIA reiterated the twin demons of an uncertain global economic climate and high fuel prices – although it was blessed with lower fuel costs in the first quarter – as challenges and recognized “the intense competitive environment”.

The increased competition from Middle-Eastern carriers in particular and from cheaper options provided by other airlines including budget carriers are apt to suppress yields even if passenger carriage increases. The months ahead will see the impact of the collaboration between Qantas and Emirates for the kangaroo route. SIA will have to do more than just wait for the good times to return, to regain its lead.


About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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