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Singapore Airlines Announces Profit Of US$618.2M

Wed May 21, 2003 6:26 pm

Today, Singapore Airlines Pte Limited - part of the Singapore Airlines Group - and some subsidiaries (Singapore Airport Terminal Services Pte Limited, SIA Engineering Company Pte Limited and Singapore Airlines Cargo Pte Limited) will reveal full year profits for the financial year 2002 / 2003.

Singapore Airlines Group posted a net profit for H1FY0203 of S$773.5 Million / US$447 315 067.35 (up 473.8% on the H1 before). In H2, fuel prices rose 43% over the six months. Fuel constituted 21.2% of expediture for the airline last year.

"It all now depends on how fast SARS can be contained and then what airlines can do to bring confidence back to travelers. What Singapore Air can do now is to contain costs or cut capacity," said Winson Fong of SGY Asset Management Limited. Bloomberg Asia surveyed eight analysts who predicted a drop in FY03/04 profits to S$559 million / US$323 269 700

At the time, the Airline addd capacity to China and Australia. Belinda Chan of ING Financial Markets predicts that revenue rose 9.3% to S$10.3 billion / US$5 958 923 922 . "The demand for cargo services was very strong last year for many carriers, including Singapore Air, especially on the trans- Pacific route,'' she added. She estimates a 10% growth in cargo revenue and as much as a 7% growth in passenger revenue.

Unlike competitors in the region, Singapore Airlines has not issued a profit warning. Analysts polled by Reuters Research - a unit of Reuters Group plc., said that the Airline's brand name has allowed it to charge premium fares, a large cash-in-hand amount and a fully-owned fleet of fuel-efficient aircraft have helped it weather the storm of the SARS crisis in the region.

Reuters Research surveyed 24 analsysts who predicted a drop in FY03/04 profits to S$632 million / US$365 634 944. "Market expectations for 2004 are too high. I expect there will be more cuts after the results. There is a lot of uncertainty going forward," said Teo Hiang Boon of G.K. Goh Research. Mr. Teo is one of the most bearish analysts predicting a fall in FY03/04 profits to S$127 million / US$73 474 111.

Dr. Cheong Choong Kong - who has worked hard for the Airline for 24 years - will end his career at the airline with one of the best and financial results yet. CEO Designate Chew Choong Seng will begin his career with a combined crisis of the aftermath of the War on Iraq and the SARS epidemic.

"I don't recall seeing traffic fall by so much in so short a time. Management must now be very vigilant in monitoring costs and know when to bring back capacity once the crisis is over so as not to lose market share," said Kenneth Tang of Credit Agricole Asset Management Limited. "He (Chew) has run regions such as the Americas and Europe and headed planning, marketing and finance. He has an excellent understanding of market dynamics," said the CEO of Exel plc. - a UK logistics company.

Former chairman J.Y. Pillay said that Chew, "would not let SIA down. He has the qualities of mind and spirit to lead SIA ably and to preserve its position in the forefront of the industry," Singapore Airlines has asked cabin crew to take one week of unpaid leave every two months. "Talks with unions are always difficult and that they have managed to get cabin crew to take unpaid leave is good. (Chew) has been there for a long time and people will give him a chance,'' said Teng Ngiek Lian of Target Asset Management Limited.

SIAL has just closed at S$9.35 / US$5.43 a share in Singapore - down 1.58%. On 31 March 2003, SIAL ended trading at S$8.75 / US$5.08 with a market capitalisation of S$10 658 765 451.25 / US$6 187 962 526. Hence, the probably market capitalisation at the moment is S$11 389 652 225.05 / US$6 612 279 956.

Below is a graph of profit expectations from May 2002 to May 2003. Note that the chart period ends on 4 May 2003 due to connection problems to the research website. Multex Investor UK Limited polled more than 20 analysts over the period. The estimates are in Singapore Dollars.

As of 4 May 2003, Multex Investor UK Limited reported:
a high estimate of S$1 269 300 000 / US$734 336 130
an average estimate of S$1 093 250 000 / US$632 484 813
a low estimate of S$778 400 000 / US$450 332 658

Below is a graph of profit expectations reported by Bloomberg Asia and Reuters Research - a unit of Reuters Group plc.

More information at the Bloomberg Asia website (1st link), the Bloomberg Asia website (2nd link) and the Reuters / Yahoo website

Currency conversion from Singapore Dollar to U.S. Dollar at current rates (21 May 2003) and is courtesy of the Currency Converter
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RE: Singapore Airlines Announces Profit Of US$618.2M

Wed May 21, 2003 6:29 pm

Nice khoa, is 618,200,000.00 US $ about £376,729,401.09  Big thumbs up

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RE: Singapore Airlines Announces Profit Of US$618.2M

Wed May 21, 2003 6:35 pm

Singapore Airlines Pte Limited has announced a post-tax profit of S$1 119.3 million / US$649 811 321.

Profit after tax and minority interests was S$1 064.8 million / US$618 171 263.

The second half is shocking. SIA made an operating profit of S$255.7 million in H1, compared to an operating loss of S$46.7 million coming from the last two months of the financial year - February and March.

Operating profit for the whole year was S$717.1 million. There is a profit sharing bonus this financial year so the airline has to pay a profit-sharing bonus for SIA staff of 3.32 months. Hence, operating profit has decreased 22.4%.

Associated and joint venture companies made a S$50.8 million in FY0102. Virgin Atlantic made a loss as well as ANZ in that year. This year, Virgin Atlantic has recovered and made a profit. Associated and joint venture companies made a profit of S$138.3 million.

Pre-tax profit was 5.5% higher at S$976.8 million / US$567 082 729. A tax writeback increased profits by S$142.5 million to a profit after tax of S$1 119.3 million / US$649 811 321. After minority interests - the bottom line is a profit of S$1 064.8 million for the Group / US$618 171 263.
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RE: Singapore Airlines Announces Profit Of US$618.2M

Wed May 21, 2003 6:42 pm

Fuel is the largest cost component for the Airline.

Fuel costs for FY0102 were S$121.5 million before hedging and for this year S$203.2 million before hedging / US$117 968 070. After hedging, the fuel costs for last year was S$203.2 million / US$117 968 070 and for this year, after hedging - fuel cost S$190 million / US$110 304 790.

Fuel costs increased 5.3% - accounting for 19.6% of expenditure. Staff costs increased 26.5% for two reasons - one was the 3.23 months of profit sharing bonus whereas none was paid last year and also, last financial year there were wage restraints and cuts. Depreciation and rental costs increased 14.7% as new aircraft entered the fleet. Maintenance and overhaul costs rose 30.2% because a lot of 777 engines reached their half life and had to be overhauled. SIA is not happy that Communiations and I.T. spending has risen sharply over the past few years - rising 21% this year.

Singapore Airlines Passenger posted an operating profit of S$209 million - down 49.4% but after tax posted a profit of S$618 million - up 9%.
Singapore Airport Terminal Services posted an operating profit of S$229.1 million - down 13.8% but after tax posted a profit of S$189.6 million - down 1.5%.
SIA Engineering Company posted an operating profit of S$140.9 million - down 30.8% but after tax posted a profit of S$142.3 million - down 22.9%.
SIA Cargo posted a S$62.9 million profit before tax and S$66.6 million after tax.
SilkAir posted a S$27.1 million profit before tax - up 49.7% and after tax a profit of S$31.6 million - up 80.5%.
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RE: Singapore Airlines Announces Profit Of US$618.2M

Wed May 21, 2003 6:52 pm

Earnings per share will be increased to S$0.874 / US$.50740. Net debt has incresaed to S$719 million / US$417 416 546.


Due to SARS, the load factor has declined rapidly. In the second week of May - load factor was at 48.9% and RPK down 62.8%. The load factor "has steadied" and over the last week or so, the load factor has increased a lot.

The RPK picture for SIA is "more grim". The reduction in load factor is systemwide. In April the load factors for the regions are as follows:

Americas: 45.2%
South West Pacific: 56.2%
Europe: 55.2%
North Asia: 35.1%
South East Asia: 42.8%
West Asia: 51.8%

In January 2003, SIA made an operating profit of S$32.3 million / US$18 751 814 .
In February 2003, SIA made an operating loss of S$25.2 million / US$14 629 898
In March 2003, SIA made an operating loss of S$72 million / US$41 799 710
In April 2003, SIA made an operating loss of S$204.2 million / US$118 548 621.
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RE: Singapore Airlines Announces Profit Of US$618.2M

Wed May 21, 2003 7:17 pm

Question and Answer Session:

CNBC: Is it a foregone conclusion that SIA will make a loss in Q1?
CCS: Things are uncertain. How long will the SARS situation last? No one really knows. SIA has plans for various scenarios but the truth of the matter is that SIA has seen what we have been shown for the operating loss for February through to April and the trend is not encouraging. However, SIA are not taking this lying down and SIA is managing hard to control costs and have implemented various measures to make it evidently or abundantly clear to the market that it is quite safe to travel on airplanes. That there is screening in more airports and quanrantine facilities and to restore confidence in travel. Hopefully, all these measures will put SIA in good standing as and when the rebound comes. The outlook is preparing for the worst but hoping for the best as well.
CCK: We are not fatalists and will not accept that the Q1 will not be a loss.

Man: What are these cost cutting measures expected to save, something something...
CCS: The cabin crew savings will save the airline S$24 million. Other measures include trying to cut expenditure by S$200 million. The neogotiations with unions are continuing. Flying about 30% less than normal will save money on fuel and others.

Straits Times: What cost-cutting measures are SIA discussing with unions?
CCS: As announced, for the personnel who are in the direct operating areas (i.e.: cabin crew and pilots) whose activities are affected by the flying program, they obvioiusly, the level of manning is surplus to current requirements. So compulsary no pay leave was pushed out. That would be one element. Wage cuts is something that SIA is talking to unions about. Retrenchement are possible.

Straits Times again: What are the range of wage cuts?
CCS: The Straits Times sources are very good.

The New Paper: The number 600 has been floated to be the number to be retrenched. Confirm?
CCS: No. The subject is very emotive and it is not easy for CCS and colleagues to see the company grow and to retrench is hard but SIA must accept change and redress the cost structure.

The Age: Something.
CCS: There was a time in the late 70s or early 80s when there were some redundancies but it wasn't retrenchment due to a slowdown in business. But what SIA is facing today is unprecedented - not only for SIA but for the global airline industry. War has brought economic gloom. The confluence of all these events in such a short time is something new.

Aviation Week & Space Technology: With the situation in North Asia not abating, are you going to park aircraft? Could you confirm that SIA is looking to retire pilots reaching the age of 60 and expatriate pilots?
CCS: At this point in time, SIA has already cut schedules by about 30%. As things stand, SIA will have some surplus MEGATOPS. But fortunately, SIA has a trade in program where Boeing will buy A343s. 9 A310s - some of which have trade in agreements and some have been leased out - so those are not an issue. The MEGATOPS can reasonably take care of them and some can be returned after leases expire! The prospects of fleet management are not daunting. With regards to parking, the traffic has more or less bottomed out. The key question is how long this will last. As to the retirement of pilots, the retirement age for pilots in Singapore is 60.
AWST: Those close to 60 - about 58, 57 will be asked to leave
BSK: The issue of who is going first is under discussion.

Bloomberg Asia: What aircraft deferrals are you seeking and how many are parked?
CCK: Aircraft that are going to come in the immediate future cannot have deliveries deferred. Later aircraft might be deferred pending negotiations.

Straits Times: How do you feel about leaving the airline at this time while facing the worst crisis ever? (To Dr. Cheong)
CCK: I feel terrible of course. There is no question of my staying because there is a strong management team and they can deal with the crisis as well as I can, if not better and I have other commitments.

Dow Jones Newswires: Beyond SARS, what is likely to be SIA's post-SARS strategy with regional rivals cutting capacity. Will SIA snatch market share?
CCS: It goes without saying that SIA hopes - SIA has been trying to matching market demand with capacity so if the rebound comes, SIA will be positioned to synchronise with it and keep up with pace. Hopefully, the market standing and shares will remain intact.

Man: What is hapenning? Open skies with Australia. If the negotiations are concluded succesfully, would it benefit SIA?
CCS: Actually, there was some reporting about the possibility of Australia and Singapore negotiating Open Skies but that event has not yet come to pass. Talks have not commenced.

The New Paper: Is there a sort of figure as to how much SARS has cost SIA?
CCK: You can judge from the figures presented. There was a loss in February, a bigger one in March and a 200 million loss in April for the airline alone. The loss is unprecedented. That should give you an idea of how much it is hurting us. I wish the pilot union would get behind us too!!

HSBC: Guide into the profitability of SIA Cargo in April?
MTJN: In the last few months of the FY, there was a tapering of the cargo market because the world economy is not doing so well. SIA can only look a few months ahead.

ATI: Will there be any more cuts to passenger capacity?
MTJN: There are no plans for further cuts but SIA is monitoring the situation - every day. SIA would like to carry out the commitment to passengers and not inconvenience them. Any cuts are considered very seriously.

AWST: With regards to deferrments, are you something APril 2004?
CCK: Recovery will be taking place in a much smaller ?. Less need for future capacity.

Reuters: How many planes are parked / grounded. If there is a loss in Q1, is that a record loss?

CCS: SIA has parked a total of nine aircraft. 6 older MEGATOPS and 3 CELESTARS. SIA is now commencing quarterly reporting and so SIA has never reported a loss but even though there may have been months where SIA did make a loss in October and November 2001, SIA has not reported a loss. If the April - June quarter does make a loss - that will be the first loss for SIA in its history.

Merill Lynch: Have you made any significant synergies? from the acquisition of VS. Has the growth strategy changed from experiences with ANZ? VS?
MTJN: There are several marketing arrangements with VS. FFP.
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RE: Singapore Airlines Announces Profit Of US$618.2M

Thu May 22, 2003 12:06 am


MTJN: There is codesharing with VS from the UK and Singapore. There are exchanges of lounges, FFP passenger miles. As far as codesharing across the Atlantic, we have not started codesharing because the UK-Singapore bilateral agreement is under discussion. SIA has airfare agreements with VS.

New Paper: CCK, you mentioned the pilot union. There are difficulties between the company and the pilot union. How do you intend to address this?
CCK: "The cabin crew have accepted no pay leave. The pilots have not agreed to do the same. umm. The reason they have given for not going along is that they want to see foreign based pilots whom they refer to as "seconded" pilots to be removed first before they take no-pay leave and I suppose take wage cuts and I'm very disappointed that at a time like this when the company is bleeding from day to day and from week to week, a group of employees would want to take advantage of the situation and try and persuade the company to change a very basic principle which the company has always adhered to. And that all employees all over the world, whether they are based in Paris, Singapore or Tokyo have equal rights and after all, we are a global company. And while these overseas based pilots might be seconded pilots, they are seconded pilots in a very technical sense because they are employed by a 100% subsidiary of ours based in Mauritius. So these pilots, these overseas based pilots, are no different from any of our other employees based in Beijing, or Johannesburg or anywhere else. They will have to take their share of pain also, but no more or no less than any other pilot. Umm. We will continue to talk to the pilots, we will have another meeting with them, at most two, because we don't have the luxury of time and if we can't reach agreement with them at the end of one or two meetings, we will have to take the matter to arbitration."

Man: Guidance on the level of capital expenditure for this year?
CCS: SIA is deferring any non-essential capital expenditure. The bulk of cap ex is aircraft and SIA is committed to cap ex expenditure of around S$1.8 billion / US$1 044 992 743

RC: "That concludes the question and answer session and the briefing. Thank you all for joining us and.. Goodnight."

CCK: Cheong Choong Kong - Deputy Chairman and CEO
CCS: Chew Choon Seng - Senior Vice President (Administration) and CEO Designate.
MTJN: Michael Tan Jiak Ngee - Senior Vice President (Commercial)
BSK: Major Bey Soo Khiang (NS) - Senior Vice President (Human Resources and Technical)
RC: Rick Clements - Vice President (Public Affairs)
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RE: Singapore Airlines Announces Profit Of US$618.2M

Thu May 22, 2003 2:36 am

Despite the profit service and quality have dropped. For shame.
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RE: Singapore Airlines Announces Profit Of US$618.2M

Thu May 22, 2003 5:09 am


Crisis situation (SARS, War, and Poor Economy) +
Shrinking cash reserve +
Asking staff for wage concessions +
S$110MM dividend payment to shareholders.

Is anyone else seeing red (no pun intended)?!?

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RE: Singapore Airlines Announces Profit Of US$618.2M

Thu May 22, 2003 6:25 am

Maybe they shouldn't cut costs, and keep their excellent service...
They could still make $200 million assuming $400 million by adding better service back of collateral is taken on.
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RE: Singapore Airlines Announces Profit Of US$618.2M

Thu May 22, 2003 6:37 am

The problem is costs need to be cut.

As shown above, unless a miracle happens (hopefully if our prayers are answered on this matter), then SIA will report a Q1 profit instead of a loss which hasn't happenned since it was floated on the Singapore Stock Exchange which has now forced companies to report financial results quarterly.
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RE: Singapore Airlines Announces Profit Of US$618.2M

Thu May 22, 2003 7:38 am

The thing about this result is that once you pull out the $278M tax write back the result is pretty medicore compared to the SIA of a few years back. In fact the profitability of the actual airline excluding SATS is quite poor.

Does anybody know the actaul contribution of Virgin Atlantic?
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RE: Singapore Airlines Announces Profit Of US$618.2M

Thu May 22, 2003 9:59 am

I raised this in the other thread but may as well ask it here...

Does anybody know why the company paid out an exceptional dividend of 9 cents per share on top of the existing 6 cents per share? This cost the company S$110m which seems a bit strange considering its attempts to save money.

S_Air... why do you keep going on about the Anzett?! What are you talking about....? Since you seem to do this in quite a few of your threads. Rupert asked you the same question but I don't think you replied...
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RE: Singapore Airlines Announces Profit Of US$618.2M

Thu May 22, 2003 10:17 am

I've sent him a email personally, and Khoa did reply to me! I must say that this Anzett thing is hilarious!

Businessflyer: If you're really interested to know what is happening.... send him an email!

So we can expect SIA's first ever loss this quater, I assume?
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RE: Singapore Airlines Announces Profit Of US$618.2M

Thu May 22, 2003 10:24 am

Rupert... Given the figures for March and the fact that things seem to be getting worse, Q1 will probably be a loss. Are you in Singapore? If so, then you will see that BA/QF are offering tickets to New Zealand for just S$300!! That is amazing... and Langkawi on MI is now down to S$75. If you are prepared to travel the savings are amazing. I am off to Bangkok in about two hours. A business class airfare with Thai is now only S$20 more expensive than an economy class airfare with SQ...! Can the airlines be making money with these kinds of airfares? (admittedly I know that they are only a select % of the total number of seats... but even though...)

As for the Anzett thing... I have noticed that whenever somebody says something vaguely critical about SQ he starts going on about The Anzett...! It just makes me very very curious!
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RE: Singapore Airlines Announces Profit Of US$618.2M

Thu May 22, 2003 12:08 pm

Yes, I'm in Singapore now..... are the airfares really that cheap? Wow.... makes me want to pack and fly off now!
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RE: Singapore Airlines Announces Profit Of US$618.2M

Thu May 22, 2003 7:12 pm

From 1 June 2003, Senior Vice Presidents and above will take a 27.5% pay cut and other managerial and divisional Vice Presidents will be asked to take a 22.5% pay cut.

240 managerial staff will be affected - reducing costs by S$12 million / US$6 958 539

In addition, all members on the Board of Directors will waive 50% of the director's fees.

Source: Singapore Airlines Pte Limited.
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