SIA Reports Highest Ever Annual Revenue
The SIA Group today reported a solid operating profit of $1,067 million for the 2018/19 financial year amid a challenging market environment, with Transformation initiatives contributing to a record revenue performance.
Although a decline from last year’s operating profit of $1,549 million ($482 million lower or -31.1%), the Group’s underlying performance was strong against the backdrop of a $1 billion increase (+25.1%) in fuel cost due largely to a 21.6% increase in fuel prices, and the absence of one-off revenue items recorded last year (-$243 million).
Flown revenue growth was up $829 million, with passenger flown revenue improving $784 million (+6.4%), lifted by traffic growth of 8.5%, on a 6.4% increase in capacity. Notwithstanding the significant expansion in capacity, a new revenue management system and revamped pricing and sales processes helped enable RASK (measured in revenue per available seat-kilometre) to hold steady against last year. Passenger load factor rose 1.6 percentage points to 83.0%, a record for the Group. Cargo flown revenue for the year improved $45 million (+2.1%), as cargo yield growth (+5.7%) was more than sufficient to offset lower loads carried (-3.5%) in a softening trade environment.
Expenditure for the Group rose $999 million (+7.0%) to $15.3 billion, with higher net fuel cost (+$688 million or 17.6%) contributing two thirds of the increase. Fuel cost before hedging for the Group rose by $1,002 million, predominantly due to a US$16 per barrel (+21.6%) increase in average jet fuel price. The higher fuel price was partially alleviated by a larger hedging gain compared with last year (+$314 million).
Group non-fuel expenditure rose $311 million, driven by airline operations. Non-fuel costs of the airline businesses rose $327 million (+3.4%), contained within the overall rate of expansion of the airline operations (+4.1%). Cost savings were achieved from numerous initiatives under the Transformation programme. Consequently, non-fuel unit costs declined 0.8%.
Group net profit for the financial year was $683 million, $619 million or 47.5% lower year-on-year. The reduction was primarily due to the lower operating profit (-$482 million), in addition to higher non-operating costs. Net finance charges increased $45 million, as the Group raised more borrowings during the year for aircraft purchases. The Group had also recognised its share of losses ($116 million) arising from Virgin Australia’s non-cash accounting adjustments in prior quarters. There was also a $60 million charge in relation to SilkAir’s re-fleeting costs for its transition from an Airbus to Boeing fleet, and restructuring costs incurred in preparation for the carrier’s integration into SIA.
