SIA third quarter profit lifted by exceptional gain on Tiger Air

SINGAPORE -  Improved passenger yields despite intense competition, savings in fuel costs offset by hedging losses and USD strength – and a gain upon consolidation of Tiger Airways has seen Singapore Airlines record a net profit of S$203 million in the December 2014 quarter, S$153 million higher on-year.

The improvement was primarily attributable to a S$56 million exceptional gain, compared to an exceptional loss of S$80 million last year (+S$136 million). Tiger Airways Holdings Limited became a subsidiary during the quarter, upon which the Group recorded a gain of $120 million arising from the remeasurement of the Group’s retained interest in Tiger Airways at fair value.

SIA said this was partially offset by an impairment loss on SIA Cargo’s 16% investment in China Cargo Airlines (-S$64 million) due to excess capacity since the global financial crisis, without near-term prospects for a turn-around.

Group operating profit wasS$147 million, S$4 million lower (-2.6%) compared to the same period last year.

SIA said that while the decline in oil prices is generally positive for the airline industry, hedging and competition will limit the effect on the Group’s earnings. Falling oil prices may also be a manifestation of a slowdown in global economic activity, which may ultimately have a negative effect on air travel demand, the airline said.

Of the outlook, SIA said competition remains intense, and that efforts to stimulate demand in weaker markets will keep yields under pressure. Airfreight demand has seen a moderate recovery recently, but competitive pressure on yield is expected to continue due to excess capacity in the market. www,singaporeair.com  (ATI).