SIA Q2 bottom line soars on stronger operating results; bright spot in slower yield decline

SINGAPORE Airlines' (SIA) Q2 net profit nearly tripled to S$189.9 million, up from S$64.9 million a year ago, bolstered by higher revenue.

Revenue rose 5.3 per cent year on year to S$3.85 billion while earnings per share clocked 16.1 Singapore cents, rising from 5.5 Singapore cents a year ago.

For the quarter under review, operating profit more than doubled from S$109.1 million to S$232.6 million thanks to a rebound in revenue, which outstripped the increase in expenditure.

For the six months ended Sept 30, net profit surged about 32 per cent year on year to S$425 million on the back of higher operating profit and lower share of losses from associated companies. Revenue edged up 5.5 per cent to S$7.71 billion with improvements across all business segments.

"Headwinds remain as competitors mount significant capacity in key markets," SIA warned. "Yields continue to be under pressure, despite some stabilisation in recent months."

For the parent airline, yield dipped 2 per cent to 10 Singapore cents per passenger-km in Q2 FY17/18.

At a results briefing on Wednesday morning, SIA's management highlighted that while more capacity is being added in the market, one bright spot was a slower decline in yield in Q2.

Citing two reasons, executive vice-president (commercial) Mak Swee Wah said: "The market has generally been a bit more buoyant than before, in relative terms. Although there's still a lot of capacity in the market and still a lot of pressure, because of the firmer demand, we've been able to hold some of the yields better. In particular, we're seeing better pick up (in corporate traffic). "

In addition, the group has introduced a new revenue management system "which allows us a bit more granular targeting of the different segments and to be able to manage our overall mix better", he added.

The latter was introduced as part of its three-year transformation programme which kicked off earlier this year as it seeks to position itself for better growth.

SIA chief Goh Choon Phong also said that SIA is planning to unveil a "significant" overhaul of its current regional Business Class product when it takes delivery of the new B787-10 next year. Just last week, it showcased its new A380 cabin products, which will take flight on the Singapore-Sydney route from Dec 18.

The airline group has declared an interim dividend of 10 Singapore cents per share, up from nine cents a share a year ago. The dividend will be paid on Dec 5.

Shares in SIA traded at S$10.60 at 1.05pm on Wednesday, up 30 cents or nearly 3 per cent from its previous close.