SINGAPORE - Mainboard-listed Singapore Airlines (SIA) on Feb 20 recorded a net profit of $659 million for the third quarter ended Dec 31, 2023, rising 4.9 per cent from $628 million in the corresponding period a year ago.

This was driven by robust passenger demand, led by a rebound in North Asian markets as China, Hong Kong, Japan and Taiwan reopened, said the group in its third-quarter business update.

The rise in net profit was also aided by a lower tax expense, a share of profits from associated companies, surplus on disposal of aircraft, spares and spare engines, and higher net interest income.

The net profit figure translates to an earnings per share of 16 cents in the third quarter of financial year 2024, up from 10.3 cents year on year.

Revenue for the quarter also increased by 4.9 per cent to $5.1 billion from $4.8 billion year on year. This surpassed the $5 billion mark in quarterly revenue for the first time in SIA’s history, the group said in the filing.

The revenue gain was due to high passenger demand, as passenger flown revenue climbed 10.6 per cent to $4.2 billion, despite a 7.4 per cent drop in passenger yields to 11.2 cents per passenger-km.

The group’s operating profit, however, decreased 19.3 per cent to $609 million, from $755 million in the third quarter of financial year 2023.

This was due to total expenditure increasing by 9.3 per cent to $4.5 billion, as non-fuel expenditure and net fuel cost both booked gains.

For the nine months ended Dec 31, 2023, the group’s net profit rose 35 per cent to a record $2.1 billion from $1.6 billion. Revenue for the period reached $14.2 billion, expanding 7.4 per cent from $13.3 billion year on year.

SIA and its budget arm Scoot flew 9.5 million passengers in the third quarter of financial year 2024, up 29.4 per cent year on year.

The group’s passenger traffic for the quarter also grew 19.1 per cent to 37.1 billion, outpacing capacity injection of 17.9 per cent, noted SIA.

Passenger traffic, expressed as revenue passenger-km, indicates the number of passengers carried multiplied by the distance flown.

As a result, the group passenger load factor improved by 0.8 percentage point to 88.2 per cent. Meanwhile, its cargo flown revenue fell 35.1 per cent to $559 million.

Cargo loads increased by 3.9 per cent to 1.4 billion tonne-km on strong year-end demand from e-commerce. This resulted in a cargo load factor of 55.5 per cent, adding 1.2 percentage points on year.

SIA’s third-quarter cargo yield of 40.3 cents per load tonne-km was 37.4 per cent lower year on year, but remained 32.1 per cent above pre-pandemic levels, referring to a cargo yield of 30.5 cents per load tonne-km in financial year 2020.

Singapore’s national carrier said the demand for air travel is likely to remain healthy for the last quarter of financial year 2024 and into the first quarter of financial year 2025.

“Forward sales continue to be robust, in line with capacity increases in most markets, supported by the demand for leisure travel through the school holidays and Easter peak in March and April 2024,” said SIA.

However, the group believes that passenger yields will continue to come under pressure from increased competition, as capacity restoration continues across the industry.

It added that heightened geopolitical tensions and economic uncertainty could weigh on business sentiment and air travel demand.

Supply chain constraints, high fuel prices and inflationary pressures will also present a more challenging operating cost environment for airlines globally.

Despite these headwinds, the group expects a return to pre-pandemic capacity levels within financial year 2025, as it adds more destinations to its network and takes stock of its fleet.

In the third quarter, SIA reinstated flights to Chongqing and Xiamen in China, while Scoot resumed service to Kunming.

“With this, the group operates to 23 destinations in China, compared to 25 points pre-pandemic,” said SIA.

It also aims to ramp up services to Fukuoka and Nagoya in Japan, Milan in Italy and Gatwick Airport in London, Britain, in the upcoming end-March to end-October operating season.

As at Dec 31, 2023, the group’s operating fleet comprised 202 passenger and freighter aircraft with an average age of seven years and one month. It has 92 aircraft on order.

Shares of SIA closed up 1 per cent, or seven cents, at $7.37 on Feb 20, before the announcement. THE BUSINESS TIMES