Singapore Airlines positive yet cautious about outlook; yields to remain steady; capacity growth


Singapore Airlines, upon the release of its 2QFY2011 financial results, stated it expects yields to remain steady. The carrier added that advance bookings for the coming months indicate that demand is holding up meaning demand would support an increase of 5% in passenger capacity over the next six months. However, forward indicators for airfreight point to a levelling off for the rest of the financial year.

Recovery in yields but still not back to pre-crisis levels

SIA reported a 20.4% increase in passenger yields (per RPM) in the quarter to USD 9.13 cents as the recovery in premium travel continues.  Cargo yields strengthened 25.1% to USD 27.78 cents for an overall yield improvement of 18.9%

Singapore Airlines passenger yield growth (% change y-o-y): 1Q2003/04 to 2Q2010/11

Singapore Airlines cargo yield growth (% change y-o-y): 1Q2003/04 to 2Q2010/11

While year-on-year comparisons to a weaker 2009 are favourable - passenger, cargo and overall yields slumped 21.9%, 34.1% and 23.8%, respectively, in the previous corresponding period - yields are yet to return to pre-crisis levels. 

Singapore Airlines passenger yield (SGD cents/pkm): 1Q2002/03 to 2Q2010/11

Singapore Airlines cargo yield (SGD cents/ltk): 1Q2002/03 to 2Q2010/11

The carrier’s strong yield growth significantly outpaced the unit cost growth of +1.1% in the period.

Singapore Airlines yield growth and unit cost growth: 1QFY2008 to 2QFY2011

2Q profit results better than expected

In the three months ended 30-Sep-2010 (2QFY2011), Singapore Airlines reported better-than-expected second-quarter earnings boosted by a robust recovery in passenger traffic aided by a strong rebound in the premium segment.

The carrier returned to profitability in the quarter with a net profit of USD294 million and an operating profit of USD268 million with the carrier’s net profit being highest since the third quarter of fiscal 2009/10. Revenues increased 18% in the period to USD2.8 billion outpacing a 0.7% increase in operating costs to USD2.5 billion.

Singapore Airlines Group operating profit margin and net profit margin: 1QFY2008 to 2QFY2011

Singapore Airlines Group revenue growth: 1QFY2008 to 2QFY2011

The carrier added that its break-even load factor was 5.7 ppts below its actual passenger load factor of 80.3% with the carrier’s break-even passenger load factors declining strongly by 142 ppts to 74.6%. The cargo break-even load factor also declined 15.4 ppts to 60.2% also below the cargo load factor of 63.3%.

Asia Pacific carriers cautiously add capacity; SIA to grow capacity by 5%

During the quarter, capacity growth was added for the first time in seven quarters.

Singapore Airlines RPK growth and ASK growth: 2QFY2008 to 2QFY2011

Capacity was added during the period to Hong Kong, New Delhi and Seoul. The all-business-class service to Los Angeles returned to daily operations in Oct-2010 while new twice-daily services to Tokyo Haneda were launched on 31-Oct-2010 2010, complementing twice-daily services to Tokyo Narita. During the northern winter, additional services will be added to destinations including Houston (via Moscow), Manchester (via Munich), Sydney and Osaka. Overall capacity growth of 5% is anticipated over the next six months.

Cathay Pacific has stated it plans to return capacity to pre-crisis level while ANA will increase international capacity by 15% in the 12 months ended Mar-2010. 

Singapore Airlines took delivery of six A330-300s and one A380-800 in the first half and decommissioned 10 Boeing 777s (six leased out and four sold). As at 30-Sep-2010, the operating fleet comprised 105 passenger aircraft – seven B747-400s, 65 B777s, 17 A330-300s, 11 A380-800s and five A340-500s – with an average age of five years 11 months.

Outlook: Cautious optimism but fuel costs a concern

While demand and business travel is rebounding, the carrier remains cautious about forward prices for jet fuel, which the carrier has labelled as “high and volatile”. The carrier commented: “There is continuing volatility in the currency markets due to challenges faced by the global economy. Given these uncertainties, the positive outlook for the second half of the financial year has to be tempered with some caution.”

SIA Group financial highlights for three months ended 30-Sep-2010 

Currency: USD


% Change

Revenue (mill)



Operating costs (mill)



     Fuel (mill)



     Labour (mill)



Operating profit (mill)



Profit before tax (mill)



Net profit (loss) (mill)



Passenger yield per RPM



Passenger costs per ASM (cents)



Traffic – passenger numbers (mill)



Passenger load factor (%)


+0.7 ppts

Breakeven passenger load factor


-14.2 ppts

Cargo volume (tonnes)



Cargo yield (cents)



Cargo cost per ASK (cents)



Cargo load factor (%)


+0.4 ppts

Cargo breakeven load factor (%)


-15.4 ppts

SIA Group financial highlights for six months ended 30-Sep-2010

Currency: USD


% Change

Revenue (mill)



Operating costs (mill)



Operating profit (mill)



     SIA Cargo



     SIA Engineering






Total debt (mill)*



Total assets (mill)*



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