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Exceptional gains boost SIA's Q3 net profit to S$202.6 million
LIFTED by exceptional gains, Singapore Airlines' (SIA) net profit for the third quarter virtually quadrupled to S$202.6 million from S$50.1 million a year ago.
The airline recorded an exceptional gain of S$56.2 million for the three months ended Dec 31, 2014, versus an exceptional loss of nearly S$80 million last year. The group recorded a gain of S$119.8 million due to the remeasurement of the group's retained interest in Tiger Airways at fair value as Tiger become a subsidiary during the quarter. This was partially offset by an impairment loss of S$63.6 million on SIA Cargo's 16 per cent investment in China Cargo Airlines.
Revenue for the quarter rose to S$4.1 billion, up from S$3.87 billion previously. Meanwhile, expenditure increased from S$3.72 billion to S$3.95 billion. As a result, operating profit softened from S$151 million to S$146.3 million.
Earnings per share for the quarter came to 17.3 Singapore cents, up from 4.3 cents previously.
"While the decline in oil prices is generally positive for the airline industry, hedging and competition will limit the effect on the group's earnings," SIA said. "Moreover, falling oil prices may be a manifestation of a slowdown in global economic activity, which may ultimately have a negative effect on air travel demand."
Yields are expected to remain under pressure, especially in weaker markets, due to competition.
"The group will be proactive to meet the challenges ahead, with a continued focus on customer service and cost discipline. Having a strong balance sheet, and with its many strategic initiatives, the group is well-placed to compete on all fronts," it added.