* Q3 net profit S$142.5 mln vs S$135.2 million year ago
* Q3 operating profit falls 17 pct y/y
* Loads, yields for both passenger and cargo under pressure
By Anshuman Daga and Kevin Lim
SINGAPORE, Feb 7 Singapore Airlines Ltd
reported a slightly weaker-than-expected 6 percent
rise in third quarter net profit as earnings from the sale of
aircraft and spares offset losses at its cargo unit, and it
warned of tough conditions ahead.
"The outlook for international air travel demand continues
to be challenging and the cargo market remains depressed amid
the troubled European economy and the weak recovery in the
United States," the Singapore flag carrier said in a statement.
SIA, Asia's second largest airline by market capitalisation,
also said loads and yields for both its passenger and cargo
businesses are expected to remain under pressure with the price
of jet fuel near its historical high.
"The depreciation of revenue-generating currencies against
the Singapore dollar poses yet another challenge," it added.
SIA, best known for its premium services, has seen
aggressive Middle Eastern carriers such as Emirates
and Qatar Airways grab more market share on long-haul routes as
they polish their service while keeping prices low.
SIA and other full-service carriers such as Malaysian
Airlines System Bhd are also facing challenges from
low-cost rivals including the ambitious AirAsia group.
For the three months ended December, SIA earned S$142.5
million ($115.10 million), up slightly from S$135.2 million a
year ago. The results were marginally below the S$146 million
consensus estimate of eight analysts polled by Reuters.
SIA's operating profit fell 17 percent to S$131 million in
the third quarter, as the cargo unit posted an operating loss of
S$29 million due to depressed yields and poorer loads. The cargo
unit's performance was, however, an improvement over the S$40
million loss a year ago.
As part of cost-cutting measures, SIA is removing 76 pilots
from its payroll as well as offering voluntary unpaid leave to
its senior pilots, and suspending cadet pilot recruitment.
Asia's budget airline sector is set to capture a 40 percent
share of Asia Pacific by 2020, up from the current 24 percent,
Citigroup said in a report.
SIA's overall load factor for passenger and cargo has
improved for two months in a row, rising to 71.4 percent in
December from 69.1 percent in October. But it has repeatedly
said its passenger seat occupancy was boosted by promotional
activity, and passenger yields would remain under pressure.
Controlled by Singapore state investor Temasek Holdings Pte
Ltd, SIA is directly challenging low-cost airlines by
launching the Scoot brand, but it could be years before the
start-up delivers any meaningful financial returns to the group.
SIA's shares have edged up nearly 5 percent over the past
three months, in line with the broader market.
(Reporting by Anshuman Daga and Kevin Lim; Editing by Daniel