Singapore Airlines reverses a year-earlier loss, reports 1Q net profit

SINGAPORE — Singapore Airlines Ltd. reported a fiscal first-quarter net profit, reversing a year-earlier loss, as the global economic recovery boosted air travel.

The carrier said Monday that it expects the recovery to continue to underpin its business for the rest of the year.

Net profit for the three months ended June 30 totaled 253 million Singapore dollars (US$184.6 million), compared with a net loss of S$307.1 million a year earlier.

Singapore Airlines had suffered a severe drop in its passenger and cargo business last year as the global economic slowdown crimped travel demand. The company started returning to profit in the third quarter of the previous fiscal year after it aggressively cut costs.

“Advance bookings indicate that the year-on-year recovery in passenger carriage and yields evident in the quarter to June will hold up for the rest of 2010,” the airline said in a written statement to the Singapore Exchange. “Similarly, leading indicators, as well as sentiment among shippers and forwarders, suggest that the recent resurgence in air freight may be sustained in the near term, although the rate of growth may abate.”

Revenue rose 21% to S$3.47 billion from S$2.87 billion after the company cut costs and improved load factors. Passenger load factor improved 6.8 percentage points to 78.4%, while cargo load factor increased 4.4 percentage points at 65%, the airline said.

During the quarter, Singapore Airlines took delivery of four Airbus A330-300 aircraft and decommissioned six Boeing Co. 777s—leasing four and selling two. As of June 30, Singapore Airlines’ operating fleet comprised 106 passenger aircraft with an average age of six years and one month, the carrier said.

The airline also said the cost of fuel hedging might be affected by forward prices being “markedly higher than spot prices.”