AVIATION | Tony Chua, Singapore

Singapore Airlines profit at $216mln

All major subsidiaries in the Group achieved better year-on-year operating results in the fourth quarter.

The Group earned a net profit attributable to equity holders of $216 million for the financial year ended 31 March 2010, maintaining its unbroken record of full year profitability. Together with the $404 million net profit in the third quarter, the fourth quarter net profit of $278 million reversed the $466 million loss recorded in the first half, according to a Singapore Airlines report.

Group revenue in the fourth quarter at $3,336 million rose 0.4% (+$15 million) over the same quarter a year ago, with higher passenger and cargo carriage. For the quarter, total Group expenditure was reduced by $254 million (-7.6%) year-on-year to $3,095 million. Expenditure on fuel increased $220 million (+29.1%) owing to higher jet fuel prices. However, this was offset by a reduction of $524 million in hedging losses, from $543 million in January – March 2009 to $19 million for the same period this year.

Consequently, Group operating profit for the quarter ended 31 March 2010 was $241 million, a $269 million improvement from the $28 million operating loss in the corresponding quarter of the preceding year. Discounting the contribution in January – March 2009 from SATS, which was then a subsidiary, the year-on-year improvement was $48 million higher at $317 million.

The Parent Airline Company earned an operating profit of $159 million in the fourth quarter of the financial year, $145 million higher than the same quarter in the preceding financial year, reflecting a recovery in load factors.

All the major subsidiaries in the Group achieved better year-on-year operating results in the fourth quarter:
• SIA Engineering Operating profit of $41 million (profit of $27 million in 2009)
• SilkAir Operating profit of $31 million (profit of $17 million in 2009)
• SIA Cargo Operating profit of $8 million (loss of $123 million in 2009).

Final dividend of 12 cents
The Board of Directors recommends a final dividend of 12 cents per share (tax exempt, one-tier) to be paid on 17 August 2010. As no interim dividend was declared, the total dividend for financial year 2009-10 will be 12 cents per share.

Fleet and route development
In the last quarter of the financial year, Singapore Airlines took delivery of three A330-300s, and decommissioned one B747-400 and one B777. As at 31 March 2010, the operating fleet comprised 108 passenger aircraft – seven B747-400s, seventy-five B777s, ten A380-800s, eleven A330-300s and five A340-500s – with an average age of 6 years and 3 months.

A new five-times-weekly service to Munich was launched on 28 March 2010 and the A380 was deployed to Zurich. More flights to Colombo, Dhaka and Mumbai were added during the quarter ended 31 March 2010, and the all-Business Class service to Newark has returned to daily operations since January 2010. In contrast, services to Pakistan and Nanjing were withdrawn in February 2010 and March 2010 respectively, while frequencies to Ho Chi Minh City and Guangzhou were reduced.

For Northern Summer 2010, capacity across the network will be increased gradually in accordance with the recovery in demand. This includes a new service to Tokyo's Haneda airport in October 2010, and increased frequencies to destinations such as Hong Kong, Seoul and New Delhi. Further capacity increases will be made when justified by growth in demand.

Subsequent events
On 29 April 2010, Singapore Airlines signed an agreement to lease six B777s to Royal Brunei Airlines for a period between two to two and a half years. In addition, an agreement to sell four B777s to Transaero Airlines was concluded on 3 May 2010.

In the year to March 2011, the Parent Company expects to take delivery of four A380-800s and eight A330-300s, while one B747-400 (to be returned at end of lease) and ten B777s (four sold and six leased out) are expected to leave the fleet. The resulting increase of one aircraft will bring the Company's fleet to a total of 109 aircraft by March 2011. The planned deployment will produce a net growth of 2 percent in available seat-kilometres.

Fuel cost will continue to be a major expense of the Group. The price of jet fuel has hovered around US$90 per barrel recently. It is difficult to predict how the price will behave over the course of the year. The Group's uplift of jet fuel in FY2010-11 is projected to be 33 million barrels. At this point, the intention is to hedge at least a fifth of the required uplift.

Advance bookings for travel in the year ahead are encouraging, especially in Business Class. Similarly, forward indicators suggest that the recent recovery in volumes of air cargo will hold up in the near term. Yields for both passenger and cargo should keep pace with the growth in demand. The sustainability of this improvement depends on developments in the world economy and on business and consumer confidence.

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