Blame the one-off provision in relation to competition-related fines.
Singapore Airlines’ (SIA) 4QFY17 swung to a core net loss of at $6.4m, vs. core PATMI of $127.3m a year ago, as it recorded a one-off provision of $131.9m in relation to competition related fines.
According to OCBC Investment Research, the group's 4QFY17 revenue was flat YoY at $3.72b despite traffic growth (+5.5%), as yields remained under intense pressure.
Operating expenses grew 3.5% YoY to $3.69b due to higher average fuel prices as well as the double-digit capacity expansion by Budget Aviation Holdings (i.e. Tigerair and Scoot) and SilkAir. For FY17, revenue fell 2.4% to $14.9m with weaker performances at passenger airlines and cargo airline on the back of yield erosion, absence of income from aircraft delivery slot changes, but mitigated by a one-time credit upon change in timing of revenue recognition of utilized tickets.
Consequently, with a 2.1% reduction in operating expenses on cheaper fuel costs, FY17 core PATMI was below expectations as it declined 16.0% to $372.1m, forming 80.8% of our FY17 forecast.
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