Singapore Airlines Cargo suffers 10% drop in traffic

Even yields dipped by 3%.

According to CIMB, although core net profit of S$156m was 1% below forecasts, the firm notes that this was largely because of improvement in non-operating items last quarter such as surplus on sales of aircraft and spares, and higher net interest income.

Overall revenue trends remained disappointing. The parent airline only contributed a small increase in top-line, mainly due to a higher number of passengers carried.

Here's more from CIMB:

This was largely offset by yield softness as the traffic boost was the result of promotional activities. Fortunately, SilkAir continues to deliver better numbers, and even though load factors declined in the period, yields did not decline while traffic rose 14% yoy.

SIA Cargo continues to suffer from weak industry conditions, as traffic fell 10%, mirroring the cut in capacity last period. Despite tighter supply growth, yields continued to deteriorate in the quarter, falling 3% yoy.

Operating expenses were little changed overall, with jet fuel costs 1% lower yoy. Staff costs rose 8% yoy in the period, faster than we had expected. Depreciation charges also increase 10% yoy, but this was partially offset by lower aircraft rental costs last quarter.

This suggests an increase in the proportion of aircraft which are fully owned by SIA or are financed via capital leases. As such, the increase in ownership costs was just 4% yoy.