Singapore Air profit surges to 7-year high on web shoppers

Bloomberg

Singapore Airlines Ltd., the carrier that is spending $850 million to refit its A380 jets and attract premium passengers, got a boost to its third quarter earnings. That didn’t come from passengers, but from cargo.
Southeast Asia’s biggest carrier reported its best quarterly profit in seven years for the quarter through December as a jump in cargo demand from online shoppers and semi-conductor makers boosted earnings. Scoot, its low-cost unit, also added to the profit growth at the company. Shares rose as much as 2.7 percent on Wednesday, the biggest intraday gain in almost three months.
After revealing a surprise loss less than a year ago as a result of intense competition from Gulf-based and budget operators, the pick up in cargo is coming to the rescue of the carrier that is undergoing an internal review of its operations. The business, which
is in the process of re-integrating into the main airline in a bid to
improve efficiency, reported a
66 percent jump in operating profit in the quarter, the most among its divisions.
“This is mainly driven by improving US and European consumption demand as well as inventory re-stocking,” said Corrine Png, chief executive officer of Singapore-based Crucial Perspective Pte. “Tech and telco-related products, luxury goods, express packages, given the rising e-commerce demand, are fuelling
this growth.”
Cargo yield — an indicator of profitability from moving a ton of goods per kilometer — rose 12 percent to 30.6 Singapore cents.
The Singapore Air group kicked off a transformation program last year, vowing bold and potentially radical actions to tackle costs as it got squeezed by Middle Eastern carriers and budget operators at both ends. While the company has revealed little else, the process may include job cuts, Chief Executive Officer Goh Choon Phong said in June.
The airline, whose shares have declined 3.6 percent this month, is under pressure to turn its performance around in a year the International Air Transport Association predicts the global airline industry will make a record profit.