08-May-2006 10:36 AM
Singapore Airlines yr to March profit seen hit by higher fuel prices
Analysis
SINGAPORE (XFNews) - Singapore Airlines Ltd (SIA) is likely to report next Tuesday that net profit for the year ended March 31 dropped to 1.26-1.35 bln sgd from 1.39 bln a year ago due to escalating fuel prices, analysts polled by XFN-Asia said.
Citigroup expects the flag carrier to post full-year net profit of 1.28 bln sgd.
"One reason for the lower net profit is because average spot jet fuel prices have risen by 40 pct year-on-year during this financial year," Citigroup analyst Corrine Png said.
But SIA is better off than most of the other Asian airlines, Png said, because it consistently hedges its fuel consumption and is able to pass on part of the increased fuel costs to passengers through fuel surcharges. Its aircraft are also more fuel efficient because they are younger, she said.
SIA has said it is increasing fuel surcharges further for tickets issued on or after May 15.
The airline will raise its fuel surcharge to 20 usd from 15 for flights between Singapore and Kuala Lumpur, Bandar Seri Begawan, Bangkok, Denpasar, Hanoi, Ho Chi Minh City, Jakarta, Manila and Penang. It will be increased to 60 usd from 50 on all other flights.
JP Morgan, which expects SIA's net profit to come in at 1.33 bln sgd, said the stronger Singapore dollar may have also helped the carrier cushion fuel costs.
An analyst at a local brokerage pegs full-year net profit at 1.35 bln sgd.
He said even though load factors have improved, "percentage increase for oil prices far outstrips the growth in passenger traffic."
Based on data from SIA, its average load factor in the year to last March improved to 68.09 pct from 67.60 pct a year ago.
"We expect a slight dip in earnings mainly due to the increase in oil prices. Even though they have implemented fuel surcharges it is not sufficient to cover the shortfall," he said.
For its part, CIMB-GK Research predicts full-year net profit at 1.26 bln sgd.
"One reason for the lower net profit is because average spot jet fuel prices have risen by 40 pct year-on-year during this financial year," Citigroup analyst Corrine Png said.
But SIA is better off than most of the other Asian airlines, Png said, because it consistently hedges its fuel consumption and is able to pass on part of the increased fuel costs to passengers through fuel surcharges. Its aircraft are also more fuel efficient because they are younger, she said.
SIA has said it is increasing fuel surcharges further for tickets issued on or after May 15.
The airline will raise its fuel surcharge to 20 usd from 15 for flights between Singapore and Kuala Lumpur, Bandar Seri Begawan, Bangkok, Denpasar, Hanoi, Ho Chi Minh City, Jakarta, Manila and Penang. It will be increased to 60 usd from 50 on all other flights.
JP Morgan, which expects SIA's net profit to come in at 1.33 bln sgd, said the stronger Singapore dollar may have also helped the carrier cushion fuel costs.
An analyst at a local brokerage pegs full-year net profit at 1.35 bln sgd.
He said even though load factors have improved, "percentage increase for oil prices far outstrips the growth in passenger traffic."
Based on data from SIA, its average load factor in the year to last March improved to 68.09 pct from 67.60 pct a year ago.
"We expect a slight dip in earnings mainly due to the increase in oil prices. Even though they have implemented fuel surcharges it is not sufficient to cover the shortfall," he said.
For its part, CIMB-GK Research predicts full-year net profit at 1.26 bln sgd.