Singapore Air Profit Tops Estimates on Travel Rebound
A Singapore Airlines Ltd. aircraft. Photographer: Munshi Ahmed/Bloomberg
Singapore Airlines Ltd., the world’s second-largest carrier by market value, posted a better-than- estimated quarterly profit as a rebound in air-travel demand helped it to fill more seats.
Net income totaled S$252.5 million ($185 million) compared with a loss of S$307.1 million a year earlier, the carrier said in a statement today. That beat the S$162.4 million average of four analyst estimates compiled by Bloomberg. First-quarter sales increased 21 percent to S$3.5 billion.
Singapore Air boosted passenger numbers 5.5 percent in the quarter as travel rebounded from the worst recession in more than six decades. United Airlines parent UAL Corp., which plans to merge with Continental Airlines Inc. to form the world’s largest carrier, also posted a net income as the airline industry heads for its first worldwide profit in three years.
“Business is coming back and the worst is finally over for Singapore Airlines,” said Jay Ryu, a Hong Kong-based analyst at Mirae Asset Securities Co. “Passenger yields are also starting to improve along with the general global economic recovery.”
Profit was also bolstered by a smaller fuel-hedging loss of S$78 million, compared with S$287 million a year earlier, Singapore Air said in the statement.
Passenger Numbers
The airline flew 4 million passengers in the period, compared with 3.8 million a year earlier, according to the statement. It filled 78.4 percent of seats in the quarter, compared with 71.6 percent a year earlier.
“Advance bookings indicate that the year-on-year recovery in passenger carriage and yields evident in the quarter to June will hold up for the rest of 2010,” the airline said. “Recent resurgence in air freight may be sustained in the near term, although the rate of growth may abate.”
Passenger yield, or the average price a traveler pays to fly one kilometer, rose to 11.7 Singapore cents in the three months, compared with 10.2 cents a year earlier. The airline filled 65 percent of its cargo space, compared with 60.6 percent a year earlier.
Singapore Air fell 0.1 percent to S$14.76 at the close of trading today. The results were released after the market closed. Of the 22 analysts covering the carrier tracked by Bloomberg data in the past 12 months, 18 have a “buy” rating, three recommended that investors hold the stock, while one says “sell.”
More Flights
The airline last week announced plans to add more flights to cities including Los Angeles, Sydney and Moscow on rising demand. Cathay Pacific Airways Ltd., Hong Kong’s largest, is also flying fuller planes, while Korean Air Lines Co., the nation’s biggest, has said it may beat its full-year sales goal.
Prospects at airlines are improving following the worst traffic slowdown since World War II last year. Carriers in Asia- Pacific will likely post the biggest profit of any region this year, according to estimates by the International Air Transport Association.
Spending on jet fuel, Singapore Air’s biggest expenditure, increased 10 percent to S$1.13 billion in the quarter. Jet- kerosene prices in Singapore averaged at $89.71 a barrel in the quarter, compared with $66.68 a barrel a year earlier.
The carrier took delivery of four Airbus SAS A330-300s in the quarter while decommissioning six Boeing Co. 777 aircraft. It had 106 passenger aircraft on its fleet as of June 30.
To contact the reporter on this story: Chan Sue Ling in Singapore slchan@bloomberg.net
Rate this Page