Singapore Air Surges as Profit Beats Analyst Estimates

Singapore Airlines Flight Staff walk through Changi Airport
Singapore Airlines flight staff walk through Changi Airport in Singapore. Training for cabin crew still takes more than three months. Photographer: Munshi Ahmed/Bloomberg

Singapore Airlines Ltd., Asia’s second-largest carrier by market value, rose the most in eight months on the city-state’s exchange after beating analysts’ estimates with its first profit increase in seven quarters.

The stock climbed as much as 2.7 percent in Singapore trading, the biggest gain on intraday basis since November 28. Singapore Air was up 2.3 percent at S$10.94 as of 10:49 a.m, while the benchmark Straits Times Index gained 0.5 percent.

Net income jumped 73 percent to S$78 million ($62 million) in the three months ended June as lower jet fuel prices and cheaper tickets boosted passenger numbers and limited the impact of declining yields, a measure of average fares. The profit beat the S$69 million average of four analysts’ estimates compiled by Bloomberg News.

“The result was significantly better than our expectation for a marginal profit,” Jim Wong and Shirley Lam, analysts at Nomura Holdings Inc., said in a note to clients yesterday. “Deterioration in passenger yields has at least been partially offset by the more significant decline in jet fuel prices.”

The results should provide “positive read across” to profit reports of other airlines, such as Cathay Pacific Airways Ltd, they said.

Yields at Singapore Air’s main unit dropped 3.4 percent from a year earlier, while fuel prices fell 6.7 percent. Jet kerosene prices averaged $122.2 a barrel in Singapore trading in the period, compared with $131 a year earlier, according to data compiled by Bloomberg.

Cathay Pacific gained 0.5 percent to HK$12.64 in Hong Kong trading. It is due to report first half results on Aug. 8.

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