Singapore Airlines Q1 profits up despite cargo weakness

By Siva Govindasamy

SINGAPORE (Reuters) - Singapore Airlines' first quarter group operating profits jumped 73.9 percent despite rising losses at its cargo division, the company said in a stock exchange filing.

SIA, which is seen as a barometre of the Asian airline industry, made S$193 million ($142.9 million) in the three months to 30 June, up S$82 million from a year before.

The flagship full-service airline unit contributed S$197 million, with SIA's Silkair regional airline unit and its low-cost subsidiaries Scoot and Tigerair all reporting profits.

Losses at SIA Cargo, however, deepened to S$34 million from a loss of S$9 million a year before.

Group revenues fell 2.1 percent to S$3.65 billion, largely due to a 11.6 percent drop in cargo revenues as yields continued to be under pressure in the global air freight market.

Expenditure fell by 4.4 percent to S$3.46 billion, large due to a S$357 million drop in fuel costs amid falling oil prices and lower hedging losses.

The company's net profit was up 182.4 percent at S$257 million, with one-off gains from a divestment of the company’s stake in a Hong Kong-based maintenance firm helping bolster the company’s bottom line.

SIA warned that the outlook remains "challenging" amid economic weakness and geopolitical concerns.

"Competition remains intense with aggressive capacity injection, and yields will continue to remain under pressure. Yields will be further diluted if key revenue-generating currencies depreciate against the Singapore dollar," said SIA.

"The cargo market remains soft, with economic uncertainty in Europe and China. Cargo yields are expected to remain under pressure as overcapacity persists in the industry."

(Reporting By Siva Govindasamy; Editing by Alexandra Hudson)