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SCMP Reporter

Singapore Airlines' (SIA) net profit fell 61.1 per cent to S$632 million (about HK$2.73 billion) and revenue dropped 5.1 per cent to S$9.44 billion for the year to March, with disastrous overseas investments, the global economic slowdown and the September 11 attacks on the United States taking a heavy toll.

However, the results unveiled yesterday were better than expected, beating the highest forecast by more than 60 per cent.

SIA senior executive vice-president (commercial) Michael Tan said passenger and cargo load factors - a measure of capacity used - had recovered sharply since the start of the year and were at 74 and 68 per cent respectively at the end of March.

But heavy discounting had pushed down yields and revenue from passengers and cargo had failed to rebound as strongly, Mr Tan said.

Despite the airline's well-publicised stumbles overseas in the past 12 months, it plans to press on with expansion.

Deputy chairman and chief executive Cheong Choong Kong said: 'There was obviously a setback with Air New Zealand but it is not going to deter us. It has made us more resilient. We knew all along that there could be risks involved . . . there could be failures.'

Apart from a S$266.9 million write-down of its investment in Air New Zealand and a NZ$350 million (about HK$1.25 billion) loss due to the collapse of Ansett Australia, the carrier posted a S$46.7 million loss from associated joint ventures. This included a share of the losses made by Virgin Atlantic, in which Singapore Airlines holds a 49 per cent stake.

The company warned plans to add capacity this year could continue to depress yields. It expects to receive 12 Boeing 777 passenger planes and one freighter this year.

Mr Tan said the addition of cargo capacity would be the focus over the next five years. While overall capacity would increase about 5 per cent this year, cargo space would grow between 8 and 10 per cent going forward, he said.

Analysts confounded - Page 2



SIA beats estimates with $2.7b profit