SIA Group reports profit fall, but revenue rise for 2018/19 financial year

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The Singapore Airlines Group (SIA) today reported a solid operating profit of S$1,067 million for the 2018/19 financial year amid a challenging market environment but down 31.1 per cent on last year’s $1,549 million.

SIA said transformation initiatives contributied to a record revenue performance of $16.3 billion, a rise of 3.3 per cent on 2017/18.

Group net profit for the financial year was $683 million, 47.5 per cent lower year-on-year. The reduction was primarily due to the lower operating profit (-$482 million), in addition to higher non-operating costs.

SIA Group said underlying performance was strong against the backdrop of a $1 billion increase (+25.1 per cent) in fuel cost due largely to a 21.6 per cent increase in fuel prices, and the absence of one-off revenue items recorded last year (-$243 million).

Flown revenue growth was up $829 million, with passenger flown revenue improving $784 million (+6.4 per cent), lifted by traffic growth of 8.5 per cent, on a 6.4 per cent increase in capacity. Passenger load factor rose 1.6 percentage points to 83 per cent, a record for the group.

Operating profit for Singapore Airlines declined $347 million to $991 million, as flown revenue growth ($613 million) was offset by the absence of nonrecurring incidental revenue ($243 million) and higher expenditure ($684 million). 

All route regions saw healthy passenger flown revenue growth for the company (+$568 million or 5.8 per cent), with Europe, West Asia/Africa and the Americas, in particular, benefitting from strong demand, more agile commercial practices and in the latter’s case, the introduction of new non-stop services.

SilkAir reported an operating profit of $15 million, a $29 million reduction year-on-year, largely due to an increase in net fuel cost (+$30 million). Scoot swung to an operating loss of $15 million from last year’s profit of $78 million (-$93 million), as costs of expansion outweighed revenue growth.

As for the future, SIA said: “Growth in forward passenger bookings in the months ahead is tracking positively against capacity injection, with robust premium cabin demand.

“Most key markets, including those that have seen significant capacity growth such as the US, Japan, Indonesia and New Zealand, continue to grow at a healthy pace. However, China’s international traffic growth rates have softened, at a time of increased supply in the market.

“Notwithstanding the current demand picture, ongoing trade disputes and slowing economic growth in key markets pose uncertainty to the operating environment. Efforts will be made to capture opportunities and mitigate any arising weaknesses in both cargo and passenger segments.”