Singapore Airlines and Scoot do well, but Silkair lags behind

Courtesy AFP

Singapore Airlines (SIA) posted full-year operating profit ending March 2018 of S$703 million (US$523 million), an increase of more than 80 per cent from last year’s S$386 million, favoured by improved passenger carriage and load factor. The airline attributes its success to early fruits of a three-year transformation programme that incorporates a new revenue management system, new airfare pricing structure and the set-up of a centralised pricing unit, and other initiatives to save fuel and reduce waste.

Budget subsidiary Scoot also showed improved profitability but at a lower but commendable rate, increasing by almost 15 per cent from last year’s S$67 million to S$77 million.

However, regional carrier SilkAir suffered a decline of 57 per cent as its operating profit plunged from S$101 million to S$43 million.

As a group (which includes SIA Cargo and SIA Engineering), the company’s operating profit surpassed S$1 billion, yielding a net profit of S$893 million, which is 183 per cent more than last year’s S$533 million – its highest since 2011. This came on the back of traffic growth higher than the decline in yield, and improved cargo and engineering revenue. Also notable is the impairment of the Tigerair brand and trademarks, and a fuel hedging gain compared to a loss last year.

The outlook looks positive with strong advance passenger bookings, but of course there are the usual caveats of competition and the volatility of fuel prices which are beginning to trend upward.

More interesting is how, following the announcement, SIA confirmed the rumour of an impending merge between SilkAir and the parent airline. The latest performance results only serve to make sense of the initiative for SilkAir to go the way of Tigerair in yet another step towards rationalizing the Group’s operations. This is no surprise (see After the merger of Scoot and Tigerair, will it be Singapore Airlines and SilkAir next? Aug 29, 2017).

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About Dingzi
Writer by passion, with professional expertise in aviation, customer service and creative writing. Aviation veteran, author, editor and management consultant. Besides commentary on business issues and life-interest topics, travel stories and book reviews, genres include fiction, poetry and plays. Nature lover who abhors cruelty of any form to animals, and a tireless traveler. Above all, a dreamer.

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