Singapore Air's H1 Profit Up On Lower Fuel Costs

Singapore Airlines' first-half operating profit jumped 40 percent on the back of an improvement across all of its business units and lower fuel costs.

The carrier, a benchmark for Asia's full-service airline industry, earned SGD$240 million (USD$170 million) in the six months to September 30, up 40.4 percent from a year before.

Without taking into account Tiger Airways, which only became a subsidiary in October 2014 and was not included in the previous year's figures, SIA made a profit of SGD$250 million.

Revenues excluding Tiger declined 4.5 percent to SGD$7.24 billion as the flagship SIA-branded business recorded lower passenger numbers and yields.

That was offset by a 5.7 percent fall in group expenditure to SGD$6.99 billion on the back of a SGD$458 million, or 16.3 percent, reduction in net fuel expenditure.

Average jet fuel prices were 41.1 percent lower than a year ago, said SIA.

That allowed the company to report a net profit of SGD$305 million, up SGD$179 million from a year before.

SIA was buoyed by its Silkair subsidiary, which earned SGD$26 million compared with SGD$5 million a year before. Losses at its cargo unit reduced to SGD$12 million from SGD$34 million, and long-haul low-cost subsidiary Scoot's losses halved to SGD$22 million.

"Uncertainty in economic conditions persists, exacerbated by concerns about China's slowing economy, which have led to weakening emerging-market currencies and volatility in stock markets. The outlook for both passenger and cargo traffic is cautious," said the airline.

SIA's business model hinges on using its hub at Singapore's Changi Airport to connect passengers within Asia and to Europe, Australia and the United States.

Profitability has been tough on European services since the 2008 financial crisis due to tepid economic growth in the continent, and competition from Gulf carriers.

Overcapacity and competition from Asian carriers has also eaten into intra-Asian profits.

Since 2011, the group has been diversifying its revenue streams to reduce its dependence on the full-service business.

It has launched Scoot, as well as Vistara, an Indian full-service airline with conglomerate Tata Sons, and taken a majority stake in budget carrier Tiger.

The airline said in October it would resume non-stop flights to the United States in 2018 - five years after it stopped them - with a new long-range variant of the Airbus A350.