SilkAir doing much better than parent SIA: CIMB

This as long-haul operations have been pressured by demand weakness in Europe and the US.

CIMB said:

The mainline carrier saw profits drop 64% yoy due to flat yields paired with a 7% rise in unit cost. A 30% yoy increase in the price of jet fuel was the key driver of cost inflation. SIA’s cost management helped ease non-fuel unit costs by 9%.

On a qoq basis, SIA mainline profits rose 54% due to the year-end holidays. Its PLF of 77.2% was only 1.2% pts higher than breakeven. In the final 4Q12, unit costs are likely to stay flat, while PLF could weaken qoq. As a result, we suspect that SIA mainline could see only marginal profits or small losses in the current quarter.

SIA Cargo suffered a S$40m loss in 3Q12, the largest quarterly loss so far this year, and a sharp reversal from the S$48m profit in 3Q11. The board inventory restocking of early 2010 has given way to a contraction in global air freight volumes, causing cargo loads and yields to drop. SIA Cargo’s yield fell 2.5% yoy in 3Q, despite a 10% rise in unit cost.

Long-haul operations have been pressured by demand weakness in Europe and the US. Short-haul demand has held up much better, while fuel cost make up a smaller proportion of the total cost of short-haul flights.

Hence, SilkAir’s operating profit in 3Q12 only fell 29% yoy, with the 4.4% rise in yield partly offsetting the 11.7% rise in unit cost. SilkAir’s 3Q12 PLF of 79% was 19.6% pts above breakeven.

Reaching the people who run Asia's businesses is harder than it used to be.

Inboxes are crowded. Attention is short. The executives you most want to reach — the founders, CFOs, and operators who actually move budgets — are the hardest to find through the usual channels. If you're building a company, a category, or a reputation, you already know this.

We've spent twenty years building the room they read. Singapore Business Review is where senior decision makers in Singapore and across Southeast Asia come for business coverage they can't get elsewhere — in print, online, and in person at the summits and roundtables we host across seven markets.

If you have something these readers should know about — a point of view worth publishing, a product worth their attention, an event worth their time — we'd like to hear what you're trying to do.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia