The SIA Group achieved a net profit of $206 million in the first half of the financial year, $10 million (+5.1%) higher than last year.
Net profit for the second quarter rose 68 per cent to $94 million
Strong passenger traffic growth continues to support operating performance
Cargo demand remains weak amid trade uncertainties
Vistara accelerates expansion and commences international operations
Revenue rose $418 million (+5.3%), primarily from strong growth in passenger flown revenue, partially offset by a reduction in cargo flown revenue, while higher expenditure (+$431 million or 5.8%) reflected enlarged operations. Accordingly, operating profit for the Group was $413 million, down $13 million or 3.1% compared to the same period last year.
The Group recorded a reduction in share of losses from associated companies (+$36 million), mostly from Virgin Australia, and a higher share of profits from joint venture companies (+$19 million). These were offset by increased net finance charges (-$54 million) due to the recognition of interest expense arising from lease
liabilities following the adoption of IFRS 16 Leases and additional financing for fleet renewal and expansion.
Passenger flown revenue for the Group was up $514 million (+8.2%), lifted by 7.6% growth in traffic. Load factor improved 1.0 percentage point to 84.6%, a record for the first-half, as uplift outpaced the increase in capacity (+6.4%). Notwithstanding the significant capacity expansion, RASK (revenue per available seat-kilometre) continues its upward trend, improving 1.3% to 7.7 cents for the first half, the highest since the commencement of the Group’s transformation programme. However, cargo flown revenue declined by $138 million (-12.5%) as a result of poorer yields (-6.3%) and lower loads carried (-6.5%). The performance deterioration in the cargo segment was mainly due to an overall drop in airfreight demand amid US-China trade tensions, and a slowdown in exports from key manufacturing countries in Europe and Asia. Industry overcapacity on key trade lanes weighed on yields.
Expenditure for the Group increased $431 million (+5.8%) to $7,912 million, primarily due to non-fuel expenditure. Non-fuel costs were higher by $318 million (+6.1%), mainly attributable to an expansion in operations. Net fuel costs rose by $113 million (+5.1%) to $2,349 million, primarily contributed by an increase in fuel volume consumed (+4.8% or $119 million) on capacity growth.
Operating profit for the Parent Airline Company rose by $47 million (+11.2%) to $465 million on passenger revenue growth. Total revenue increased $406 million, driven by passenger flown revenue (+$481 million), on an 8.6% increase in passenger carriage (measured in revenue passenger-kilometres), against a capacity expansion of 7.4% (measured in available seat-kilometres). Passenger load factor rose 1.0 percentage point year-on-year to 84.6%, while RASK was up 2.4%. Higher nonscheduled services revenue (+$38 million) supported the revenue improvements as well.
However, lower cargo revenue (-$138 million) and an increase in expenditure of $359 million offset some of the gains.
Ex-fuel costs were up $258 million (+6.3%), largely on higher staff costs and aircraft standing charges, below the growth in passenger capacity (+7.4%). Net fuel cost also increased $101 million (+5.5%), partly resulting from higher volume uplifted (+5.1%) and a stronger US dollar.
SilkAir continues to be adversely affected by the global grounding of the Boeing 737 MAX 8 aircraft, clocking an operating deficit of $19 million for the period. Notwithstanding a reduction in capacity (-1.1%) from route transfers to Scoot and the withdrawal of the 737 MAX 8s from service, the carrier achieved passenger flown revenue growth of $4 million (+0.9%). Passenger load factor rose on the back of a 2.8% increase in traffic, driving a 1.2% improvement in RASK. However, this was negated by lower non-scheduled services revenue and incidental revenue, leading to a $6 million decline in operating revenue. Expenditure was up $10 million, partially attributable to
737 MAX 8 related costs, along with higher net fuel cost.
Total revenue for Scoot improved $7 million, driven by passenger flown revenue growth of $29 million as capacity expansion (+5.6%) was matched by higher passenger traffic (+5.8%). However, passenger revenue improvements were tempered by weaker RASK (-2.1%) on lower yields, declines in cargo revenue (-$4 million or 13.0%) and other operating revenue (-$18 million). Expenditure rose $74 million (+8.5%), mainly a result of higher depreciation from a larger fleet. In addition, Scoot continued to proactively reduce aircraft utilisation during the period to improve operational resilience. As a result, the carrier recorded an operating loss of $77 million, a deterioration of $67 million year-on-year.
SIA Engineering posted an operating profit of $37 million, $16 million higher than last year. Revenue from the airframe and line maintenance segment increased $7 million, but was partly offset by lower revenue from the engine and component segment, resulting in an overall increase in revenue of $4 million. Expenditure reduced by $12
million, largely due to lower subcontract and material costs, further contributing to the improvement in operating performance.