SIA halves cargo operating loss

SIA Cargo more than halved its operating loss to S$34m in the first half of the current financial year, versus S$71m of red ink in the comparable period 2013.
The Singapore flag carrier parent group stated: “Airfreight demand has seen a moderate recovery in recent months, with demand projected to be stronger in the third quarter as a result of the traditional peak period in the lead-up to Christmas.
“However, overcapacity in the airfreight market is expected to continue to put pressure on yields. While there has been a reprieve from cost pressures arising from the decline in fuel prices in recent months, there is concern that the decline reflects a slowdown in major economies in the world which could ultimately hurt travel demand.”
Freight revenues fell 1.6 per cent in the half year ending September, driven by a 3.8 per cent capacity cut in tonne-km, “though this was partially compensated for by better yields and higher load factor”.
Due to “better capacity management” SIA Cargo – managing eight Boeing 747-400 freighters and passenger bellyholds – saw yields increase 1.9 per cent in first half 2014/15 and the load factor rise marginally by 0.2 percentage points to 62.2 per cent.
In the second quarter period to the end September, SIA’s cargo revenue was down 0.5 per cent on the back of lower capacity (-4.1 per cent), “but was mitigated by improved yields of 2.8 per cent”.
The freight division recorded an impairment loss of $7.0m in the half 2014 financial year on two surplus B747-400Fs that have been removed from the operating fleet and marked for sale.
The cargo arm suspended freight operations to Lagos from July and added services to Amsterdam, Brussels and Delhi in September to cater to seasonal demand.
In its group outlook for cargo and passenger, SIA stated: “The operating landscape for the airline industry remains competitive and challenging, as an uncertain global economic climate and geopolitical concerns persist.”
It added: “Demand is generally flat, and yields will remain under pressure amid intense competition from other airlines and promotional activities in weaker markets.”