SIA 2008 profits nearly halved

Singapore - Singapore Airlines (SIA) group earned a net profit of S$1.062 billion (US$721 million), for the financial year ended 31 March 2009, a decline of 48.2% year-on-year at US$671 million. The result reflects severe deterioration in operating conditions in the fourth quarter of last year.

The group raked in an operating profit of US$614 million in 2008, a decline of 57.5% or approximately US$820 million from a year earlier. Of the decline, US$337 million alone was registered in the fourth quarter of last year.

The group's operating loss of US$19 million in Q408 is in contrast to the US$318 million operating profit made during the same period a year earlier.

SIA group's operating profit for the year 2008 was US$559 million, a US$557 million or 49.9% decline year-on-year.

The group's airport terminal service arm, Singapore Airport Terminal Services (SATS) recorded a 2% decline in operating profits at US$78 million, while its engineering arm, SIA Engineering recorded a 9.4% increase in operating profits at US$76 million.

On the other hand, SilkAir's operating profits decline 16% at US$23 million, while SIA Cargo recorded a US$166 million loss in contrast to a profit of US$89 million a year earlier.

SIA group revenue fell 19.1% or US$534 million to US$2.25 billion, due to the decline in passenger and cargo volume in the fourth quarter 2008.

Group expenditure dipped 8% or US$197 million lower, while non-fuel expenditure fell US$206 million or 12.9% year-on-year.

According to CNA, SIA does not plan to divest its stake in SIA Engineering Company. This comes after the group earlier announced plans to give up its entire stake in its SATS subsidiary.

Chew Choon Seng, CEO of SIA said, "We have reviewed the engineering position and come to the conclusion that it is strategically more important to us in terms of being critical to the operating integrity, reliability of our flying operations."

SIA has since signed new agreements with SATS on May 8, CNA reported.

Under the new terms, SATS will continue to supply SIA with ground handling and in-flight catering services for the next three to five years beginning 1October 2009.

The group predicts its plan to trim excess capacity, coupled with a strong balance sheet will ensure the company remains buoyant through the downturn, while efforts to improve efficiency and productivity and waste management are also ongoing.