KrisFlyer News Opinion SilkAir Singapore Airlines

Transformation Plan Bears Fruit: SIA Announces S$893m Full-Year Profit

Group profits skyrocket 148% year-on-year as the transformation plan risks pay off, with improvements almost across the board.

SQ A380 New (Airbus)

Singapore Airlines broke the news yesterday evening that not only had they pulled off year one of their dramatic transformation plan by soaring strongly into the black but they had also smashed the market analyst’s average forecasts (S$697m) by S$196m.

Operating Profit Results

Here’s how each group division performed compared with the previous financial year.

FY 16/17
FY 17/18
SQtrans.png 386 703 + 82
MIlogo.jpg 101 43 – 57
TZlandtrans 67 77 + 15
SQCargo 3 148 + 4,833
SQEngineer 72 76 + 6
Other Group Companies – 6 10
SIA Group 623 1,057 + 70


The 2017/18 financial year started most memorably for frequent flyers with a devaluation of the KrisFlyer scheme, though it was somewhat offset by removal of fuel surcharges from award tickets. The airline followed up by similarly devaluing many of its Star Alliance partner award tickets in late 2017.

No big surprise then that SIA touted “changes in estimated breakage rates and member benefits for the KrisFlyer programme ($178 million)” as significant contributors to their “incidental income”. In English – more people let their miles expire without using them than expected and redemptions became poorer value for customers.

Singapore Airlines

It’s fair to say that Singapore Airlines has had a busy 2017/18 financial year with a number of major changes.

Physical changes include the announcement of new A380 cabin products and the introduction of the world’s first Boeing 787-10, which also included their new regional business class product. Semantic changes from the “transformation department” notably included the introduction of a whole new fare structure.

These changes have met with both commendation and criticism but have paid off in droves with an 82.1% increase in operating profit.

Entrance to launch
It was a busy year for Singapore Airlines with two new product launches. (Photo: MainlyMiles)

But let’s not forget the other airline subsidiaries who account for over a third of operating profit, where there has also been some interesting financial movement.


SilkAir’s profit has dived by over 57% year-on-year. This was attributed to a 10% expenditure increase mainly as a consequence of capacity growth, while revenue rose by only 3% despite a 17% increase in passengers carried.

SilkAir suffered a 12% drop in yield per passenger kilometre and a 9% drop in revenue per passenger seat kilometre.

Of course a large bulk of SilkAir’s traffic is not down to direct ticket sales but transit passengers provided by SIA at a fixed transfer price for each route. Which I’m sure hasn’t been amended…

Whatever the reason, these poor results look set to confirm our earlier prediction of their impending absorption into Singapore Airlines within the financial year just as SIA Cargo was merged after their last round of poor results.

Edit 18th May: Singapore Airlines formally announced the merger of SilkAir into SIA this morning. See our article for full details and analysis.

SilkAir & SIA (Andrew Thomas)
Into the fold this financial year? SilkAir isn’t long for this world and the latest results conveniently make the case for a merger this financial year even stronger. (Photo: Andrew Thomas)


Scoot’s successful completion of the merger with Tigerair has no doubt created significant synergy savings but digging further into their results makes for less impressive reading. A 3.3% increase in load factor to 85.7% is very good – sadly this is offset by a 3.1 percentage point increase in breakeven load factor, making their future profits much more vulnerable to seasonal load factor variation.

Nevertheless the carrier was the third most profitable group division in FY 17/18, recording a 15% overall improvement in operating profit.

Scoot 787 (Darren Koch)
Scoot will see the biggest growth in the group this financial year with an overall fleet increase of 8 aircraft (20%), including two more Boeing 787s (pictured). (Photo: Darren Koch)

Singapore Airlines Cargo

SIA Cargo’s figures are impressive, if not astounding. S$148 million operating profit, effectively from break even the previous year. This division has gone from “charity case” to the second most profitable group division in the blink of an eye, and we’re not exaggerating. S$3 million profit last year, S$50 million loss in FY15/16, S$20 million loss in FY14/15 and S$100 million loss the year before that – in recent years SIA Cargo was a basket case… until now.

Frankly, we had expected to see a retirement announcement for the fuel guzzling Boeing 747-400F (former “Mega Ark”), but given this dramatic turn around in fortunes they look set to stay.

SQ 747 Cargo.jpg
Singapore Airlines Cargo went from practically charitable status in the 16/17 financial year to being the second most profitable group division in 17/18

That decision may get reversed if oil prices continue to push towards US$100/barrel as predicted by many. This dramatic turn around was pinned on “strong air cargo demand”, but was no doubt also significantly bolstered by savings as a result of the merger.

Group Fleet

Nothing too surprising was announced about the group fleet that we didn’t already know or report on before. In summary, new deliveries in the financial year 2018/19 (April 2018 – March 2019) will be:

  • 7 Airbus A350-900ULR
  • 4 Airbus A350-900 (regional config)
  • 3 Airbus A380-800 (new cabin products)
  • 7 Boeing 787-10

Note that 4 of these aircraft (3 787-10s, 9V-SCB, SCC and SCD, and an A380-800, 9V-SKW) have already entered the fleet since 1st April 2018, leaving 4 787-10s and 2 A380s for delivery as of 18th May 2018. Additionally one of the Airbus A350-900 (regional config) aircraft will be delivered in FY18/19 but will enter service in FY19/20 (suggesting it will be delivered in the last week of March 2019). We expect all four of these aircraft will deliver in early 2019, after the 7 A350ULR variants.

SQ A350ULR First Flight (Airbus)
Airbus A350 deliveries this financial year will include an increased weight ULR variant (pictured) and a lower weight plane for regional flights. (Photo: Airbus)

The following aircraft will leave the fleet during the financial year:

  • 4 Airbus A330-300
  • 1 Airbus A380-800
  • 1 Boeing 777-200
  • 5 Boeing 777-200ER

The Outlook

Exciting times ahead for Singapore Airlines passengers with the introduction of more 787-10s, regional A350s (both sporting the same excellent new product), retrofitting of older A380s with new cabin products and the introduction of the A350-900ULR for resumption of direct flights to New York and Los Angeles.

Subsidiaries are also looking at major changes. Scoot’s second European destination, Berlin, is already confirmed to begin in June. We expect the announcement of at least one more Europe destination before the end of the year (we’ve been hearing a lot about Vienna…). Scoot will also receive the first of their brand new Airbus A320neo aircraft.

Further major changes may be afoot. Rumblings in the back office not only indicate a merger of SilkAir and Singapore Airlines but perhaps more interestingly that Scoot may be taking on some of SilkAir’s Boeing 737-800 and 737 MAX 8s, with the Scoot A320neos perhaps diverted to the ‘regional wing’.


Airlines have been dining out on low fuel prices for the last few years but this looks set to end soon. The market generally predicts increasing fuel prices over the next year driven by decreased supply from Iran, general instability in the Middle East and political uncertainty regarding Korea / China / Russia / USA.

SIA has done well to adopt several new more fuel-efficient aircraft types at relatively early opportunity and this potentially stands them in better stead than the likes of Cathay Pacific.

SQ 787-10 SCA (Boeing).jpg
SIA has pushed ahead with introduction of fuel-efficient aircraft like the 787-10. (Photo: Boeing)

Whether some of the more audacious structural changes actually materialise is yet to be seen but these excellent financial results after just the first year of “transformation” will certainly have emboldened SIA that “fortune favours the brave”.

Stay tuned for the latest news and opinion from Mainly Miles.

(Cover Photo: Airbus)


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