[160516.EN.AIR] Lower Cargo Yields Hammer SIA Cargo Performance As Losses Widen

SINGAPORE International Airlines Cargo posted a full year operating loss that widened by S$28 million (US$20.4 million) year on year, reported Air cargo Asia Pacific, Perth.

The company reported a loss of US$36.3 million, even as traffic rose 2.6 per cent year on year in fiscal 2015 ending on March 31.

Although operating expenses were indeed driven down by lower fuel costs, falling $122.7 million for the year, yields fell even faster by 11.6 per cent.

Declines to fourth-quarter yields were more pronounced, down 15.5 per cent on the non-recurring demand for charter flights in 2015, which resulted from the US west coast port disruptions.

Given the increase in cargo traffic, which increased to 6.5 billion freight tonne kilometres, rates appear to have been discounted too steeply, said New York's Air Cargo World.

SIA Cargo said it will "continue to focus on higher-yielding product segments" as it moves into 2016.

While operating expenses dropped by S$168 million, mainly due to lower fuel costs, there was a S$196 million drop in revenue driven by yield erosion of 11.6 per cent that itself was partially offset by higher freight carriage (+2.6 per cent).

SIA Cargo's air freight carriage (in load tonne-kilometres) increased 2.6 per cent year-on-year, lagging behind capacity expansion of 4.9 per cent. Load factor dropped 1.4 percentage points to 61.9 per cent.

The carrier maintained a fleet of nine 747-400 freighters as of March 31.

Looking ahead, management says the outlook remains cautious for air cargo amid the economic slowdown in China and ongoing uncertainty surrounding the global economy.

Source : HKSG.