Singapore Airlines FY net profit may fall on lack of exceptional gains

Singapore (Thomson Financial) - Singapore Airlines is expected to report on Tuesday a decline in net profit for the year to March 2008 in the absence of exceptional gains that inflated earnings the year before, analysts said.

Twelve analysts polled by Thomson Financial forecast a net profit for SIA of S$1.93 billion on average compared to S$2.13 billion the year before. The previous year's earnings were boosted by about S$421 million of exceptional gains arising from the divestment of an office building and a stake in an aircraft leasing company. The airline also booked S$246.7 million in tax write-backs in the previous year. Excluding the exceptional gains, SIA's earnings should show an improvement, said Raymond Yap, an analyst at CIMB-GK Research.
 "Travel demand and yields are improving," Yap said.

Passenger traffic has been exceptionally strong for SIA, which recorded an average passenger load factor of about 80 percent in the year to March 2008 even though the airline expanded its capacity with the introduction of the Airbus A380 jumbo jet to its fleet, Yap said. Yields have also been strong despite higher jet fuel prices.

Top Asian airlines such as SIA and Cathay Pacific have been able to pass on nearly 60 percent of the rise in fuel costs to consumers by adding fuel surcharges to air fares, said Mark Webb, Hong Kong-based analyst for HSBC Global Research. SIA said on Wednesday it will increase its fuel surcharge effective May 12, the second time this year, due to the continued rise of jet fuel prices, currently at $140 a barrel. The airline has been regularly raising the fuel surcharge in the last four years.

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