Singapore Airlines (SIA) posted 2QFY Mar12 net earnings of $194.2m. While this was a YoY decline of 49%, the number was a sharp improvement from that in 1QFY Mar12 when the carrier spooked the market by barely breaking even.
As expected, significant respite came from lower fuel prices. The airline’s 2Q fuel bill declined sequentially by $30m, or 2%, to $1.41b despite a 4.8% increase in capacity. Average market jet fuel prices contracted by 4% QoQ. Passenger yields were at 11.7 cts/pkm, a marginal decrease from 1Q’s 11.8 cts/pkm. Traffic and load factors remained healthy, as evidenced by its monthly reporting.
However, SIA is not yet out of the woods. For 1HFY Mar12, cargo recorded an operating loss of $31m, while the passenger airline only achieved an operating profit of $53m. This was offset by significant contributions to group earnings from SIA Engineering and SilkAir.
SIA also recorded a one-off non-operating gain of $48.1m in the second quarter, from the return of capital on the redemption of preference shares at associate Virgin Atlantic. We will seek further clarification and details on this issue.
In line with the weaker 1HFY Mar12 performance, the interim dividend has been cut to 10 cents per share from 20 cents per share a year ago. This was within our expectation. Pending SIA’s results briefing today, we are unlikely to change our core earnings significantly and are still confident of earnings acceleration in the second half. This will be driven mainly by lower fuel costs and with loads and yields maintained. Our current FY Mar12 earnings forecast stands at $766m. However, we caution that the recovery remains fragile. Our target price and recommendation are under review.
No comments:
Post a Comment