Singapore Airlines’ (SIA) 3QFY18 revenue grew 6.0% YoY to S$4.08b with improvements across all business segments: 1) passenger traffic growth (+6.9%) outpaced decline in passenger yield (-3.1%), 2) cargo recorded both higher freight carriage (+4.4%) and yield (+12.1%), and 3) revenue growth at engineering services (+7.9%).

3QFY18 operating expenses rose 5.4% YoY to S$3.75b, driven mainly by higher staff costs (+5.7%), handling charges (+11.2%) and higher net fuel costs (-9.2%) on higher average jet fuel prices, but partly offset by lower rentals on leased aircraft (-11.5%). Consequently, 3QFY18 PATMI jumped 61.5% YoY to S$286.1m.

For 9MFY18, revenue grew 5.7% YoY to S$11.79b on stronger passenger and cargo flown revenue. 9MFY18 operating expenses increased 3.6% YoY to S$10.95b on similar reasons as 3QFY18.

All major entities in SIA group except SilkAir reported improved operating results as SilkAir’s higher costs due to expansion in operations outstripped revenue growth.

Consequently, stripping out one-off items recorded in 9MFY17 and 1QFY18, 9MFY18 core PATMI beat our expectations as it jumped 42.2%.

Source: OCBC Research - 14 Feb 2018