Category Archives: SilkAir

Singapore Airlines Group’s net profit declines by 55.5% to S$126 million ($97.7 million), reports demand is flat

Singapore Airlines Group (Singapore Airlines, Scoot, SilkAir and Singapore Airlines Cargo) (Singapore) reported its net profit in the first half was down by $157 million (a decline of 55.5%) year-on- year to S$126 million ($97.7 million US).

The group issued this full statement:

GROUP FINANCIAL PERFORMANCE

First Half 2014-15

The Group earned an operating profit of $171 million in the first half of the 2014-15 financial year, an improvement of $2 million (+1.2%) over the same period last year.

Group revenue was down $154 million (-2.0%) to $7,587 million, mainly due to lower incidental revenue stemming from reduced compensation pertaining to changes in aircraft delivery slots [see Note 2], and lower income from the lease of aircraft, due to the expiry of leases to Royal Brunei Airlines. Passenger revenue was lower year-on-year (-0.4%), notwithstanding a 1.4% increase in traffic, as a result of yield declines (-1.8%) amid the competitive operating environment and depreciating revenue-generating currencies, led by the Australian Dollar and Japanese Yen. Cargo revenue fell 1.6%, driven by a capacity cut (-3.8%), though this was partially compensated for by better yields and higher load factor.

Group expenditure at $7,416 million declined $156 million (-2.1%) over the previous financial year. Fuel costs after hedging fell $107 million, attributable to lower volume uplifted (-3.2%), the weaker US Dollar against the Singapore Dollar, and a 0.4% decline in jet fuel price after hedging.

Note 1: The SIA Group’s unaudited financial results for the half year and second quarter ended 30 September 2014 were announced on 6 November 2014. A summary of the financial and operating statistics is shown in Annex A. (All monetary figures are in Singapore Dollars. The Company refers to Singapore Airlines, the Parent Airline Company. The Group comprises the Company and its subsidiary, joint venture and associated companies).

Note 2: The settlement agreement was reached in Q1 FY1314 and $92 million was recognised in the first half of FY1314, of which $59 million pertained to change in prior years. $34 million compensation was recognised in the first half of FY2014-15.

Group net profit in the first half was down $157 million (-55.5%) year-on- year to $126 million. The share of results of associated companies fell $154 million, largely attributable to the Group’s share of Tiger Airways’ loss of $129 million, which included material charges relating to the sublease of surplus aircraft and sale of Tigerair Australia. The commencement of equity accounting for Virgin Australia from the second quarter further contributed to the weaker results (-$16 million). Exceptional items accounted for a loss of $10 million in the first half, compared to a net exceptional gain of $22 million last year [see Note 3]. These were partly offset by higher gains on disposal of aircraft, spares and spare engines (+$31 million).

The Parent Airline Company’s operating against the corresponding period last year. Revenue was down $151 million (-2.4%), arising from reduced incidental revenue [see Note 2] and passenger revenue. The fall was nearly offset by a $148 million (-2.4%) reduction in expenditure, due to lower fuel costs after hedging, and stringent cost management. Unit ex-fuel cost was down 3.9% year-on-year.

SIA Engineering’s operating profit declined $19 million (-33.9%). Total revenue fell by $4 million (-0.7%) as a result of lower airframe and component overhaul revenue, offset in part by higher fleet management revenue. Expenses rose by $15 million (+2.8%), primarily as a result of an increase in subcontract services.

SilkAir’s operating profit declined $17 million (-77.3%), as weaker yields (-5.0%) put a drag on revenue and capacity injection (+3.7%) pushed operating expenditure up.

SIA Cargo’s operating loss narrowed by $37 million from last year. With better capacity management, yields and load factor were up 1.9% and 0.2 percentage points, respectively.

Note 3: Exceptional items in the first half of FY1415 pertained to the Parent Airline Company’s provision for settlement with plaintiffs in the Transpacific Class Action ($11 million), SIA Cargo’s additional impairment on two marked-for-sale B747-400F aircraft ($7 million), partly offset by additional gain on sale of Virgin Atlantic Limited (VAL) to Delta Air Lines, Inc. ($7 million), and partial refund of fine on appeal from the Korean Fair Trade Commission ($1 million). Exceptional items in the first half of FY1314 was $22 million, mainly pertaining to gain on sale of VAL ($339 million), partially offset by SIA Cargo’s impairment on four B747-400 aircraft removed from operation ($293 million) and SFC’s impairment loss on its assets with the closure of its Maroochydore operations ($24 million).

Second Quarter 2014-15

Group operating profit for the second quarter improved $45 million (+51.7%) to $132 million.

Group revenue was almost flat at $3,905 million. Passenger revenue increased marginally, as higher passenger carriage was largely offset by a 0.9% decline in yields. Cargo revenue was down 0.5% on the back of lower capacity (-4.1%), but was mitigated by improved yields (+2.8%).

Group expenditure declined $41 million (-1.1%) to $3,773 million. Fuel costs before hedging fell $115 million, partially offset by a loss on fuel hedging, compared to a hedging gain in the same quarter last year (+$76 million).

Group net profit was down $70 million (-43.5%) year-on-year to $91 million. This was largely attributable to weaker results from associated companies (-$138 million), partly mitigated by higher operating profit (+$45 million), and higher gains on disposal of aircraft, spares and spare engines (+$35 million).

FIRST HALF 2014-15 OPERATING PERFORMANCE

The Parent Airline Company’s passenger carriage (in revenue passenger kilometres) increased marginally by 0.1%, while capacity (in available seat-kilometres) dipped 0.2% during the first half of the financial year. As a result, passenger load factor improved by 0.2 percentage points to 79.8%.

SilkAir recorded a 0.4 percentage-point increase in passenger load factor to 69.7%, as its 4.2% growth in traffic outpaced capacity injection of 3.7%.

SIA Cargo reduced its capacity (in capacity tonne-kilometres) by 3.8%. Airfreight carriage (in load tonne-kilometres) declined by 3.4%. Consequently, cargo load factor improved 0.2 percentage points to 62.2%.

No. 05/14 6 November 2014 Page 4 of 6

INTERIM DIVIDEND

The Company is declaring an interim dividend of 5 cents per share (tax exempt, one-tier), amounting to $59 million, for the half-year ended 30 September 2014. The interim dividend will be paid on 27 November 2014 to shareholders as of 18 November 2014.

FLEET AND ROUTE DEVELOPMENT

The Parent Airline Company took delivery of two Airbus A330-300s in the second quarter. As at September 30, 2014, the operating fleet of the Parent Airline Company comprised 105 passenger aircraft – 57 Boeing 777s, 29 Airbus A330-300s and 19 A380-800s, with an average age of 7 years.

During the quarter, SilkAir took delivery of two Boeing 737-800 aircraft, sold one Airbus A320-200 and decommissioned another A320-200 in preparation for return to lessor. As at September 30, 2014, its operating fleet comprised 26 aircraft – 14 Airbus A320-200s, six A319-100s and six Boeing 737-800s.

There was no change to Scoot’s fleet during the July-September quarter, comprising six Boeing 777-200s.

SIA Cargo operated a fleet of eight Boeing 747-400 freighters at September 30, 2014, the same as the previous quarter. It suspended freight operations to Lagos from July 29, 2014, and added services to Amsterdam, Brussels and Delhi in September to cater to seasonal demand.

In the Northern Winter season (October 26, 2014 – March 28, 2015), the Parent Airline Company will increase capacity to Auckland with daily Airbus A380 services, replacing the smaller Boeing 777-300 ER. To cater to peak period demand, three additional weekly services will be operated to Melbourne and Sydney, and two additional weekly services will be operated to Brisbane and Christchurch, from the end of November 2014 to January 2015. In addition, three weekly services will be operated to Sapporo from December 2014 to mid-January 2015. As part of a service restructuring to the Middle East, flights to Cairo and Riyadh have been suspended from October 2014. SilkAir suspended its twice-weekly services to Solo with effect from October 26, 2014. From December 12, 2014, it will begin daily services to Denpasar. Together with the Parent Airline Company, a total of five daily trips will be served between Singapore and the city, subject to regulatory approval. This will bring the combined network of both airlines to 99 cities in 35 countries.

OUTLOOK

The operating landscape for the airline industry remains competitive and challenging, as an uncertain global economic climate and geopolitical concerns persist.

Demand is generally flat, and yields will remain under pressure amid intense competition from other airlines and promotional activities in weaker markets.

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 slow- down in major economies in the world which could ultimately hurt travel demand.

The Group will continue to track market movements closely and make appropriate adjustments to capacity, while practising cost discipline in all business areas. With a strong balance sheet, the Group is well positioned to meet the challenges ahead.

Analysis of the financial report:

Comment by Kelvin Wong of www.cityindex.com.sg

Earnings per share for 1H 2014/2015 has declined to $0.107 from $0.24 (y/y) which represents a sharp drop of 55%. Similar for Q2 2014/205 which EPS has declined to 7.7 from 13.6 (y/y) which translates to a 76% decline.

This poor performance has been contributed by its subsidiaries’ contribution towards the SIA Group’s operating profit where we see poor performance in SIA Engineering & SilkAir (both decline drastically by 33.9% and 77.3% respectively from 1H 2013/2014 to 1H 2014/2015.)

Going forward, SIA Group is likely to see downside pressure on its bottom-line due to intense competition from budget airline operators and economic risks such as the spread of Ebola that will hamper international travel.

Technically, SIA is still trading in a multi-year sideways configuration since Nov 2011 and in order to see a change of trend to the upside, it needs to break above the key resistance at 10.92

Link to Kelvin’s page at http://www.cityindex.com.sg/market-talk/analysts/kelvin-wong/

Copyright Photo: SPA/AirlinersGallery.com. Singapore Airlines’ Airbus A380-841 9V-SKL (msn 058) arrives in London (Heathrow).

Singapore Airlines: AG Slide Show

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SilkAir introduces a new brand campaign with its first Boeing 737-800

SilkAir (Singapore) introduced its first Boeing 737-800 into revenue service yesterday (February 20) with the 737-8SA 9V-MGA (man 44217). The carrier is celebrating its 25th anniversary. The subsidiary of Singapore Airlines has also rolled out a new brand campaign emphasizing its full-service amenities. The carrier issued this statement:

SilkAir, the regional wing of Singapore Airlines, has launched a new brand campaign that looks to rekindle the joy of flying. Moving away from the idea of travel as being purely transactional, the campaign focuses on how Asia’s most awarded regional carrier creates journeys worth taking by offering customers a seamless and enjoyable travel experience at all times.

From check-in to touch down, the full-service carrier caters to the needs of the well-travelled global customer, providing comfort and convenience to those looking to explore Asia’s newest frontiers. Titled ‘A Joy to Fly’, the campaign redefines true value for the discerning traveller, emphasising and bringing to life the many benefits that SilkAir offers through a set of distinctive icons that feature across all the ads.

Having established its personable and warm in-flight service in its previous campaign ‘Feel at Home in the Air’, SilkAir aims to further differentiate itself and cement its positioning as a full-service carrier. The new regional campaign presents a visual display of a range of these benefits, including 30kg and 40kg baggage allowance for Economy and Business class respectively, inflight meals, reliable flight schedule, the KrisFlyer frequent flyer programme and through check-in service. Additionally, a wireless inflight entertainment system that is currently on trial will progressively be rolled out from Q2 2014. This new system will allow for free wireless streaming of blockbuster hits, short features as well as chart-topping music to customers’ laptops and personal handheld devices, keeping them entertained throughout the flight.

“SilkAir has always endeavoured to deliver a flying experience that is enjoyable and assuring, by placing our customers’ needs at the forefront of our product offerings. With the aim of celebrating the joy of flying, our new campaign is a reflection of the commitment and effort that goes into ensuring that every single detail – from the check-in process to entertainment and meals on-board – makes it a joy for customers to fly with SilkAir,” said SilkAir’s Vice President, Commercial, Mr. Ryan Pua.

Beyond functional benefits, the campaign also illustrates the joy of flying by highlighting SilkAir’s extensive network of 47 exotic destinations around the region, as well as the seamless connectivity between Singapore Airlines and SilkAir that customers can enjoy.

Created in conjunction with SilkAir’s 25th anniversary and the delivery of the airline’s first Boeing 737-800, the campaign is set to run on print, out-of-home and digital platforms. The advertisements are currently on display at City Hall MRT station platforms.

To mark the launch of the campaign, SilkAir will also hold an online contest where fans can either visit silkair.com/ajoytofly or scan the QR code located below each aircraft window on the City Hall MRT platform to stand a chance to fly to their dream destination on SilkAir’s new Boeing planes by voting for their top 3 dream destinations. The contest closes on March 13, 2014, with 12 Economy Class return tickets up for grabs.

On top of dressing the airline’s first Boeing 737-800 in a specially designed livery to commemorate its silver anniversary, SilkAir will also be rewarding its customers with special promotional deals later this month, with 250,000 tickets made available at special rates for customers in Singapore and across the region.

The number of destinations includes two new destinations, Kalibo and Mandalay, which will be launched on May 27, 2014 and June 10, 2014 respectively.

Copyright Photo: Ivan K. Nishimura/Blue Wave Group. Brand new Boeing 737-8SA 9V-MGA passes through Honolulu on its delivery routing on February 10, 2014.

Video:

SilkAir: AG Slide Show

SilkAir takes delivery of its first Boeing 737-800

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SilkAir (Singapore) and Boeing (Chicago and Seattle) celebrated the delivery of the carrier’s first Next-Generation 737-800 (737-8SA 9V-MGA, msn 44217). The delivery also marked the start of the airline’s transition to an all-Boeing fleet. Over the coming years, Boeing will deliver a total of 23 737-800s and 31 737 MAX 8s to SilkAir.

SilkAir’s new 737 will enter service later this month, flying to existing destinations including in Malaysia,Thailand and Indonesia. With the follow-on 737 deliveries, SilkAir will fly the aircraft to more destinations in Cambodia, Vietnam, India and the Philippines starting in March.

SilkAir is a full-service airline and the regional wing of Singapore Airlines. It currently flies more than 350 weekly flights to 45 destinations in 12 countries.

SilkAir is also celebrating its 25th Anniversary. The airline issued this statement in January:

With 25 years in the air under its wing, SilkAir, the regional wing of Singapore Airlines, will be celebrating its Silver anniversary this year. Marking its anniversary celebrations, the airline will be taking delivery of the first aircraft in its new fleet of 54 Boeing 737s in early February 2014. A total of eight planes are expected this year, with the remaining aircraft to be delivered by the end of this decade. This delivery will enable SilkAir to maintain a young and modern fleet, and cater for the airline’s continued network expansion plans by significantly growing its existing fleet. With the new aircraft, several enhancements will be offered to improve the in-flight experience for travellers including upgraded cabin interiors with more spacious overhead luggage compartments and lighting systems.

In addition to the milestone aircraft delivery, SilkAir will roll out a host of surprises and celebrations for their avid Asian traveller target. For starters, to rally consumers and involve them in SilkAir’s historic Boeing delivery, the airline will bring fans and aviation lovers together to virtually deliver the new aircraft to Singapore. Tracking the actual delivery route, from the Boeing Renton factory in Seattle to Singapore’s Changi Airport via Honolulu, Majuro and Guam, the ‘Bringing Boeing Home with SilkAir’ program is Asia’s first 25-hour flight simulator event that will allow up to 150 selected members of the public to fly a simulator SilkAir Boeing 737-800 plane into Singapore. The event will take place overnight from February 7-8, 2014 at Flight Experience Singapore, located at the Singapore Flyer.

SilkAir travellers will also be rewarded through special promotional deals where 250,000 tickets will be made available at special rates for consumers in Singapore and across the region.

Commenting on the anniversary celebrations, SilkAir Chief Executive, Mr. Leslie Thng, said “It is a tremendously exciting time for the airline, and I am honoured and humbled to be part of such a milestone celebration. I would like to pay a special tribute to our 1,500 employees who have been with us on our incredible 25 year journey. Without their unwavering support, dedication and heart, we would not be here today.”

He added, “SilkAir’s success is also due to the on-going support from our passengers and the public. Helping travellers discover Asia’s newest frontiers for the past 25 years, we are always looking at ways to enhance the journey for our customers. Our new Boeing fleet will enable us to put the passenger at the centre of our focus, with the objective to deliver a higher level of quality and experience. Despite aggressive competition, we have maintained a strong foothold in the market as a full service regional carrier and become known for offering access to unique destinations, with genuine and thoughtful service that exemplifies true Asian hospitality. Moving forward, we will continue to improve and adapt, catering to the evolving needs of travellers in Asia. For instance, to appeal to a more well-travelled audience looking for adventure, we will focus on expanding our network to unique destinations especially in key markets such as China, India and Indonesia. We will continue to build on the last 25 years, and soar to new heights of air travel excellence.”

The demand for flight travel in Asia-Pacific continues to rise, presenting vast opportunities for growth. The Boeing 737-800 delivery allows SilkAir to tap into the growing demand and explore the opening of routes across Asia for our travellers. To meet the need for more crew and pilots with the right skills to operate and run the Boeing 737 fleet, SilkAir has invested in conversion training at Singapore’s Boeing Flight Services Training Centre to equip existing staff with the skills needed for the transition.

The first aircraft is planned to enter service from February 20, 2014, flying to destinations including Kuala Lumpur, Penang, Phuket and Medan while the arrival of the second plane will allow the addition of other routes for the new aircraft including Siem Reap, Danang, Davao, Cebu and Kochi from March 17, 2014.

Since its inception, the airline’s network has expanded to cover 45 exotic destinations in 12 countries across the region. A full-service carrier that offers services and features that ensure enjoyable and reliable travel experiences, SilkAir has maintained a strong position in the intra-Asian market and is already Asia’s most awarded regional airline, with recent titles such as Regional Airline of the Year (Air Transport News 2013 Awards) as well as the TTG Asia Travel Awards Hall of Fame to its name.

Copyright Photo: Boeing. SilkAir and Boeing on Monday (February 3) celebrated the delivery of the carrier’s first Next-Generation 737-800. The delivery also marked the start of the Singapore-based airline’s transition to an all-Boeing fleet. Pictured here is a celebration with company and airline employees at Boeing Field in Seattle on Monday.

SilkAir: AG Slide Show

Video:

SilkAir logo

Route Map:

SilkAir 2.2014 Route Map

SilkAir defects to Boeing for 23 Boeing 737-800s and 31 737 MAX 8s

SilkAir (Singapore), the regional wing of Singapore Airlines, has signed a Letter of Intent (LOI) to purchase up to 68 new aircraft from Boeing.

The order is the largest in SilkAir’s history and remains subject to the negotiation of a final purchase agreement.

It will comprise firm orders for 54 aircraft and purchase rights for another 14. Firm orders will comprise 23 Boeing 737-800s and 31 Boeing 737 MAX 8s. SilkAir will have the flexibility to switch to other variants within the Boeing 737 product range.

SilkAir currently operates 21 A319s and A320s, with three more A320s due for delivery by the end of 2013. The new aircraft will cater for both growth and fleet renewal.

Copyright Photo: Michael B. Ing. Airbus A319-132 9V-SBF (msn 3104) approaches the SIN base for landing.

SilkAir: 

 

 

 

Silk Air Airbus A319 briefly catches on fire after a safe emergency landing in Indonesia

Silk Air (Singapore) Airbus A319 briefly caught fire while making an emergency landing at Adi Sumarmo International Airport in Solo (Indonesia) today (March 6) according to this report by the Jakarta Globe. None of the passengers and crew members were injured in the incident.

Adi Sumarmo International Airport (IATA: SOC, ICAO: WARQ) is an airport in Solo, Central Java, Indonesia.

Read the full report: CLICK HERE

Copyright Photo: Michael B. Ing.

Silk Air Slide Show: CLICK HERE

SilkAir adds Koh Samui in Thailand

SilkAir (Singapore) launched its first flight to Koh Samui, Thailand on September 27.

Flight MI 772 departs Singapore Changi Airport at 0810 hours and reaches the Thai resort island at 0900 hours. The return flight, MI 771, departs Koh Samui at 1030 hours and reaches Singapore at 1325 hours (all times local).

Koh Samui is SilkAir’s third destination in Thailand, after Phuket and Chiang Mai, and the 36th destination in the airline’s network. The three times weekly flights operate on Tuesdays, Thursdays and Sundays and are operated with the A319 aircraft, featuring both Business and Economy Class.

SilkAir Slide Show: CLICK HERE

Copyright Photo: Michael B. Ing. Please click on the photo for information about the airline.

Route Map:

SilkAir to take over Singapore-Penang route

SilkAir (Singapore) will take over the Singapore-Penang route from parent Singapore Airlines on December 1.

New link:

biz.thestar.com.my/news/story.asp?file=/2009/10/6/business/4847429&sec=business

Copyright Photo: Michael B. Ing.  Please click on photo for full view, information and other photos.

Copyright Photo: Michael B. Ing. Please click on photo for full view, information and other photos.