SINGAPORE (XFNews) - National carrier Singapore Airlines Ltd is expected to report Friday net profit

Only one of the five analysts polled by XFN-Asia expect SIA's net profit to rise to 300 mln sgd, while the rest predicted it will fall to 130-235 mln sgd.

Those expecting weaker earnings said poor cargo traffic and rising fuel costs will offset any good from increased passenger traffic.

The airline made a net profit of 298 mln sgd in the fourth quarter to March.

While passenger numbers rose in tandem with capacity, the airline's overall load factor dipped to an average of 65 pct in the second quarter from 67.50 pct a year ago due to weak cargo traffic, analysts said.

Strong passenger traffic, which rose 7.9 pct year-on-year on average in the first quarter, could help boost the airline's overall yields although this may be tempered by rising fuel costs, analysts said.

"The wild card is passenger and cargo yields," said an analyst with a foreign brokerage, who expects SIA's net profit to fall to 130 mln sgd from 259 mln sgd a year earlier.

Weak cargo traffic along with higher oil prices could drag overall yield, he said.

But a European brokerage analyst who sees net profit rising to 300 mln sgd said other analysts were too pessimistic over the impact of weak cargo traffic on overall yield.

"Cargo represents a very small component of overall yield," the analyst said.

He said improved passenger traffic, which should translate to better overall yield for the airline, should compensate for weaker cargo.

CIMB-GK analyst Glenford Tan believes SIA's net profit will slide to 235 mln sgd as higher jet fuel prices weigh.

"This is still a decent set of numbers," Tan said, noting that the airline was able to partially mitigate the rising cost of fuel by imposing higher fuel surcharges.

In May, SIA raised the fuel surcharge for flights between Singapore and Kuala Lumpur to 10 usd per flight, in line with other regional flights, from 4 usd, while the fuel surcharge on all long-haul flights increased to 30 usd per flight from 22 usd.

And from this month, the fuel surcharge on long-haul flights was raised further to 45 usd per flight, while the surcharge on all regional flights has been increased to 12 usd per flight.

OCBC Securities analyst Rohan Suppiah reckons that SIA's higher fuel surcharges would have offset just up to half of the increase in fuel cost.

"SIA's first quarter earnings looks most likely to be lower," Suppiah said, citing the decline in the airline's overall load factor, but did not give an estimate.

In a research note, JP Morgan projected net profit will drop to 186 mln sgd in the first quarter.

"The (first) quarter is seasonally the weakest for SIA, with the bulk of earnings derived during peak holiday seasons over the balance of the year. Nevertheless, SIA's results can be distorted by gains from associates as well as gains from asset sales," it said.