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 Singaporeair.com Currency Converter