May 17, 2018 / 10:20 AM / 3 months ago

Singapore Airlines beats expectations with highest profit in seven years

SINGAPORE (Reuters) - Singapore Airlines Ltd (SIAL.SI) on Thursday topped market expectations by reporting a 148 percent rise in full-year net profit to the highest level since 2011, as passenger and cargo revenue rose and it benefited from a transformation program.

FILE PHOTO: A woman walks past a Singapore Airlines (SIA) logo at a ticketing booth at Changi airport in Singapore May 14, 2013. REUTERS/Edgar Su

However, it warned of pressures from intense competition, costs and rising fuel prices despite strong bookings for the coming months and a continued stabilization in airfares.

The carrier, a benchmark for Asia’s premium airlines, made S$893 million ($665.6 million) in the year ended March, up from S$360 million a year earlier and 28 percent higher than the S$697 million average forecast from 14 analysts polled by Thomson Reuters I/B/E/S.

A strong fourth quarter marked a turnaround from a year ago, when an operating loss by its flagship full-service airline led the company to launch a three-year transformation program designed to cut costs and boost revenue amid competition from Chinese and Middle Eastern rivals and low-cost carriers.

Singapore Airlines said transformation initiatives including a new revenue management program, a new airfare pricing structure and the establishment of a centralized pricing unit boosted revenue, while the airline also saved costs via more efficient use of fuel and waste reduction.

“The first year of the ... three-year transformation program has shown good progress,” the airline said. “The next two years of the program will further build on initiatives around enhancements to the customer experience, revenue growth and improvements in operational efficiency.”

Singapore Airlines’ group revenues rose 6.3 percent to S$15.8 billion for the full year, with improvements across all business lines, outpacing a 3.5 percent rise in costs, including an 18 percent increase in fuel.

The airline announced a final dividend of S$0.30 a share, nearly triple the S$0.11 paid a year earlier.

In the fourth quarter ended March 31, operating profit rose to S$214 million from S$27 million a year earlier, with the flagship full-service airline swinging from last year’s S$41 million loss to a S$137 million profit.

Average ticket prices, or yields, rose 1 percent in the fourth quarter, breaking a downward trend as the airline and its peers curbed discounting to counter rising fuel prices.

Oil prices have risen to the highest level in three and a half years, with Brent crude futures LCOc1 reaching $80 a barrel on Thursday.

Reporting by Jamie Freed; Editing by Himani Sarkar and Dale Hudson

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