Singapore Air’s Profit Jumps 68% on Associate Companies

(Bloomberg) -- Singapore Airlines Ltd. posted a 68% rise in second-quarter profit, helped by better contributions from associate companies and joint ventures.

Net income in the three months to September increased to S$94.5 million ($70 million), from S$56.4 million a year ago, the carrier said in a statement Tuesday. Sales climbed 3.9% to S$4.22 billion.

Key Insights

• With no clear sign of when the 737 Max will return to service worldwide, Singapore Air subsidiary SilkAir has flown six of the planes to Australia’s Outback for storage. Costs grew as the carrier leased some planes to make up for lost capacity from the 737 Max grounding. It has also impacted budget unit Scoot, which was expected to get some of the Boeing aircraft to expand its services.
• The prolonged grounding of the 737 Max could delay a plan to merge SilkAir into Singapore Air, which said it would start revamping SilkAir’s cabins from 2020. The regional carrier has been switching to a fleet of 737s from Airbus SE A320s.
• Fuel costs will remain a major concern as geopolitical tensions could cause oil-price volatility. Singapore Air has been adding more fuel-efficient A350s and 787-10s into its fleet to help mitigate some of that uncertainty. The U.S.-China trade dispute could also continue to undermine cargo demand.

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• Passenger bookings in the coming months are expected to be stronger, with demand in its premium cabin supporting its yields.
• Fuel costs climbed 1.7% to S$1.18 billion in the quarter. Brent prices fell 18% to an average $62.03 in the July-September period.
• Passenger yields -- a gauge of money earned from flying a customer per kilometer -- was unchanged at 9.9 Singapore cents.
• Interim dividend was 8 Singapore cents.
• Click here for the first-quarter financial figures.

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Will Davies, Ville Heiskanen

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