Singapore Airlines’ management elaborated on the improvements in its share of results from joint ventures and associates which bolstered its fiscal second quarter results, based on the transcript released Thursday of its earnings briefing.
On Tuesday, SIA reported its fiscal second quarter net profit jumped 67.9 percent on-year to S$94 million on improvements in the share of results from associates and joint ventures, offset by higher net finance charges.
The share of losses of associated companies narrowed to S$49.7 million in the quarter, from S$117.1 million in the year-ago period, the carrier had said.
“This is all accounted for by the reduction in losses or share of losses that we recognize in Virgin Australia,” Stephen Barnes, senior vice president for finance at the carrier, said at the briefing. “In the prior year, they had significant charges. They still had impairment charges this year, but at a much lower level than last year.”
In August, Virgin Australia reported a A$349.1 million net loss for the fiscal 2018-19 year, narrower than the A$681 million loss the previous year.
For the fiscal second quarter, SIA posted a share of profits of joint venture companies of S$9.9 million, compared with a year-ago loss of S$500,000.
Goh Choon Phong, SIA’s CEO, noted the KrisShop, which was previously outsourced, is now 70 percent-owned by the carrier.
“We no longer look at KrisShop as just a channel for us to sell commodities, goods on board the plane,” Goh said. “We are developing KrisShop into an omni-channel e-commerce retailer, which means that you are no longer limited to sales made on board a plane.”
KrisShop should yield revenue of more than S$60 million for the group for the full financial year, almost 30 percent higher than the predecessor entity generated a year earlier, Goh said.
KrisFlyer contributes ‘significantly’
Goh said the KrisFlyer frequent flyer program contributed “significantly” to revenue.
In the 2018-19 financial year, the program contributed more than S$700 million to revenue, up around 18 percent on-year, Goh said, noting the number hasn’t previously been shared. “Up to the mid-year point, the first half year, we are seeing a similar percentage increase on a year-on-year basis for this year.”
“As part of our transformation efforts, we have actually stepped up our efforts to increase that revenue,” including enlarging partnerships and merchant pools as well as increasing KrisFlyer membership, Goh said, nothing there are more than 4 million members of the program.
The carrier has also launched KrisPay, what may be the first frequent flyer program-tied digital wallet, Goh said, adding a patent on the technology, which uses blockchain, has been filed and there are plans to expand offerings related to it.