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."