SIA Engineering posts fiscal 2Q swung to net profit as more flights were handled

A Singapore Airlines Scoot plane on the tarmac at Changi Airport in October 2018.A Singapore Airlines' Scoot plane at Changi Airport

SIA Engineering reported Friday a fiscal second quarter net profit of S$10.5 million, improving by S$40.2 million on-year as more flights were handled. But it noted the number of flights remains a fraction of pre-pandemic levels.

Revenue for the July-to-September period increased 32.2 percent on-year to S$138.2 million, the aviation services firm said in a filing to SGX.

Expenditure in the quarter increased 15.4 percent on-year to S$142 million, mainly on lower grants from government wage support and rollbacks on worker measures, the filing said.

The engine and component segment posted a S$14 million contribution, down 24.3 percent on-year, while the airframe and line maintenance segment reported a narrower loss of S$2.0 million, compared with around S$3.8 million in the year-ago period.

For the fiscal first half, SIA Engineering posted net profit of S$25.03 million, swinging from a year-ago net loss of S$18.96 million. Revenue for the April-to-September period grew 18.2 percent on-year to S$263.5 million, the filing said.

“Government wage support recognised during the period was lower than the same period last year as wage support has been progressively stepped down. Nonetheless, it continued to significantly mitigate the costs of retaining staff. Without this support, the group would have recorded a loss of S$39.5 million,” SIA Engineering said.

The company did not declare a dividend, noting it would have posted a loss without government support.

“Flight recovery had been slow and gradual, and its outlook remains uncertain. In view of these, the company will not be declaring any interim dividend,” the company said.

Outlook

SIA Engineering said the number of flights handled in the fiscal first half climbed 84 percent on-year, but was still only 25 percent of pre-pandemic levels.

“The pace of recovery remained slow, as the increase in flights were mainly from the base carriers at Changi Airport,” SIA Engineering said. “For our overseas Line Maintenance stations, which were supported by faster recovery in domestic travel, the rate of increase in the number of flights handled was higher than our Singapore base.”

The company noted uncertainties and risks from Covid-19 persist.

“We are encouraged by the Singapore government’s strategy to stimulate air travel with the expansion of bilateral agreements for quarantine-free travel for fully vaccinated travellers,” the statement said.

“While we are ensuring our readiness to scale up at the appropriate levels to meet the changing demands for MRO services, the performance going forward will be dependent on the revenue recovery outpacing the tapering off of government wage support and our gradual and prudent reinstatement of manpower management measures. We will continue to exercise financial discipline in managing our cost,” SIA Engineering said.