SIA's operating profit crashed 20.4%.
According to OCBC, as a recap, TGR registered its first profitable quarter in seven tries (net profit of S$2.0m) on the back of efficient capacity management, which helped to improve passenger yields and control the growth in operating expenses.
Conversely, SIA’s results were less encouraging with operating profit declining 20.4% YoY to S$131.0m. Passenger yields remained depressed for SIA and that negated savings from favourable fuel prices during the quarter.
Only with gains from non-operating segments did SIA post a 5.4% YoY improvement in PATMI to S$142.5m.
Here's more from OCBC:
Competition amongst premium carriers in the Asia-Pacific region remains keen – especially with the decline in business travel – and demand continues to wane on its business and first class seats.
This will invariably led to a continuation of the promotional fare strategy employed by SIA and other premium carriers like Cathay Pacific, which will then lead to the persistence of the trend where capacity growth outstrips demand and passenger yields depress further.
To SIA’s credit, passenger yields have stemmed their slide for the past three quarters but unless the global economy and sentiment picks up dramatically, we do not envision a situation where yields will pick up in the coming quarters.
We maintain our preference for TGR over SIA as we expect the turnaround story for the former to continue (i.e. narrowing losses for its Australian segment and continued strong demand and high utilisation rates for TGR SG).
While TGR will still post an overall loss for FY13, we are accounting for a positive showing in 4Q13.
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