Singapore Airlines records $493m profit in first quarter
Singapore Airlines records $493m profit in first quarter
Agence France-Presse, Singapore
Singapore Airlines (SIA) reported on Friday a net profit of
S$849.3 million (US$493 million) for the year to March after a
turbulent 12 months in which SARS sharply undercut travel.
SIA's performance was down 20.2 percent from the previous year
but the airline roared back from a historic first-quarter loss of
S$312 million caused by the outbreak of Severe Acute Respiratory
Syndrome.
On an annual basis, the carrier recorded a net profit of
S$477.9 million in the three months to March but bounced back
with an annualized S$1.15 billion profit for the final nine
months of the year.
The result surprised analysts who had forecast SIA to post an
annualized profit of S$665 to S$720 million, and led to a profit-
sharing bonus for staff who were forced to endure pay cuts
because of SARS.
The airline's staff, who had taken pay cuts of up to 15
percent, will get a one-off lump sum payment to fully reinstall
the slashed wages, plus 15 percent, and a further bonus of 2.05
months' salary, as per an agreement brokered with unions last
year.
SIA said its performance had been boosted by two major factors
-- a cut in Singapore's corporate tax rate from 22 to 20 percent
and the strength of major revenue generating foreign currencies,
particularly the British pound, the euro, the Japanese yen and
Australian dollar.
An increase in passenger traffic in the last half of the
financial year also contributed.
Revenue for the year was S$9.76 billion, from S$10.52 billion
in the previous 12 months.
Despite the surprisingly good profits and its especially
strong performance in the final three months of the year, SIA
cautioned the outlook for the current financial year was mixed.
"Long-haul business looks promising but short-haul regional
operations will see keen competition," SIA said in a statement.
The airline said it was well positioned for higher demand in
major routes to the United States, Japan, Australia, Europe,
China and India.
But it said traffic in these sectors required the situation in
the Middle East stabilizing and China and India continuing to
lead a strong global economic growth.
SIA showed it was particularly concerned about the emergence
of low-cost airlines in Asia, highlighting the fact that four
budget carriers have either already, or intend to, set up a base
in Singapore this year.
"This is in addition to the growing number of low-cost
carriers based in neighboring countries. Yields on short-haul
flights will come under pressure as a consequence," the statement
said.
"It is imperative that costs continue to be kept under
control."
SIA chief executive Chew Choon Seng told reporters last month
the airline was aiming to cut costs by between S$800 million and
S$1.6 billion annually to remain competitive in a rapidly
changing industry.
"Staying profitable in this day and age is not good enough,"
Chew said, highlighting low-cost airlines, global health scares
and terrorism as some of the challenges.
"If nothing else, the avian flu and the Madrid bombings in the
first quarter of this calendar year should serve as very strong
reminders of the volatile and unpredictable world in which we
live in and do business."