SIA says third-quarter net profit up 6.0%

Singapore Airlines (SIA) said Thursday its third-quarter net profit rose six per cent year-on-year as the sale of aircraft and spare engines as well as interest income offset the impact of a business slowdown.

Net profit for the last three months of 2012 totalled S$143 million, SIA said, attributing the rise to gains from the "sale of aircraft, spares and spare engines, and higher net interest income".

Revenue however eased 0.40 per cent to S$3.86 billion, and the carrier warned of tough times ahead for the passenger and cargo markets.

"The outlook for international air travel demand continues to be challenging and the cargo market remains depressed amid the troubled European economy and the weak recovery in the United States," the airline said.

"Loads and yields of both passenger and cargo businesses are expected to remain under pressure, while the price of jet fuel continues to be at a historical high," it added.

"The depreciation of revenue-generating currencies against the Singapore dollar poses yet another challenge."

Fuel expenses totalled S$1.5 billion during the quarter, accounting for more than 38 per cent of revenues.

SIA said its non-operating gains were dented by S$20 million in fines for its subsidiary SIA Cargo in relation to civil penalty proceedings "in respect of competition law matters in Australia and New Zealand".

The cargo arm of SIA was slapped with the fines last year after it admitted to colluding with various other airlines, including Hong Kong's Cathay Pacific, to fix prices for air cargo.

SIA -- widely regarded as a bellwether for full-service airlines -- has implemented a series of cost-cutting measures amid a global industry slowdown.

In the latest measure, the airline asked 76 foreign pilots to leave by June 30 before the expiry of their employment contracts.

It had earlier called for captains and first officers to volunteer for unpaid leave and has also frozen its intake of cadet pilots.

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According to SIA, this isn't an accurate view of the profits, attributing the rise to gains from non-operating income. Question is, the company is still making quite a handsome profit of over S$100million, and that is just one quarter. Yet it is so conservative in its methods, cutting costs in every aspect possible.