Singapore Airlines Annual Operating Profit Drops Nearly 9 Percent Y/Y

Singapore Airlines Annual Operating Profit Drops Nearly 9 Percent Y/Y

Singapore Airlines Annual Operating Profit Drops Nearly 9 Percent Y/Y

A breakdown of the annual results showed SIA's mainline operation, dubbed "the parent airline company", hardest hit with a 20.4 per cent fall in operating profit from $S485m in 2015-16 to $S386m in 2016-17.

Singapore Airlines (SIA) will re-integrate its SIA Cargo subsidiary as a division of the mainline carrier, in a move meant to improve its operating efficiency. This is its first loss in five years.

Net profit for the year to end March was SGD$360.4 million, down from the previous year's SGD$804.4 million.

SIA Cargo reported an operating profit of S$3 million for the financial year following a loss of $50 million in 2015/16 - despite a drop of S$87 million in revenue due to a 10.3 percent fall in yields. SIA, which is under pressure from regional discount carriers and Middle-Eastern rivals, said in February that 2017 will be a challenging year as passenger and cargo yields - a key measure of profitability - remain under stress.

SIA is not alone in reporting sliding profits.

SIA said the many strategic initiatives being implemented to address the structural changes in the industry were now showing positive results.

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Load factors eased 0.6 of a percentage point to 79 per cent, while yields slipped 3.8 per cent and cost per available seat kilometre excluding fuel rose 3.6 per cent.

A dedicated transformation office is conducting the review, aimed at reshaping the business "that continues to deliver high-quality products and services, though with a significantly improved cost base and higher levels of efficiency", it said in a statement Thursday (May 18). "It will improve efficiency and offer greater flexibility for staff deployment by maximising synergies with the larger SIA business", says SIA CEO, Goh Choon Phong.

SIA was among many carriers to face penalties by the European Commission, which said the companies ran a global scheme affecting cargo services in the continent by coordinating their actions on surcharges for fuel and security without discounts over six years. Seven Boeing 747-400 Freighter aircraft will continue to be operated, while the Cargo Division will continue to manage the passenger aircraft "bellyhold" space for SIA, SilkAir and Scoot.

SIA Cargo was a division of SIA until July 2001, when it become a separate subsidiary.

"For a group of staff for whom alternative job positions have yet to be confirmed, placement opportunities will be facilitated elsewhere within the SIA Group", said SIA. Despite the smaller freighter fleet, SIA Cargo says its overall capacity, including that from passenger aircraft, still grew 4-5% in each of the past two financial years. This has forced SIA Cargo to right-size its fleet.

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