SIA's profits soared 78.2% to $160.6m

Aided by better associate performance, one-off gains.

According to OCBC Investment Research, in terms of SIA's bottom-line, PATMI came in higher by 78.2% to S$160.6m following a much better-than-forecasted associate performance (+82.7% to S$63.2m) and one-off gains of S$12.5m (versus S$4.2m loss in 2Q13). 

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Although Singapore Airlines’ (SIA) 2QFY14 revenue was in line with our expectations (+2.8% YoY to S$3.9b), a lower fuel bill resulted in an improvement in its operating profit (+23.4% to S$86.9m).

We had originally factored in a 3% YoY increase in fuel costs but 2Q14 saw a 0.5% dip instead.

Management declared an interim dividend of 10 S cents (vs. 6 S cents for 1H13).

Yields continue to fall for parent airline
Despite the growth in passenger carriage outpacing capacity expansion (+4.9% vs. +3.2%), passenger yields for the parent airline still fell QoQ for the third straight quarter (-3.5% YoY & -0.9% QoQ to 11.0 S¢/pkm) as sustained competitive pressures necessitated a prolonged extension of promotional fares.

As for SilkAir, yields also fell (-5.2% YoY and QoQ to14.0 S¢/pkm) following the failure of passenger demand to absorb capacity injections from new routes.

Lastly, the removal of four freighters did not improve cargo yields fell (-1.8% YoY and QoQ to32.1 S¢/tkm) as demand remained soft.