Singapore Airlines (SIA) has maintained its unblemished record of profitability since its establishment, with a group operating profit of S$983.4 million ($547 million) for the year ending 31 March 2002 despite a "harsh operating environment".

The operating result was 27% lower than that for the previous year, while the net profit figure plunged 61%, from S$1.62 billion to S$631.7 million.

Despite the sharp drop in earnings, the carrier's results are being viewed positively as it had warned of a potential first full-year loss in its history.

Although revenue fell 5.1% to S$9.44 billion during the year, expenditure was reduced by 1.6% to S$8.46 billion.

SIA saw traffic fall sharply after September but has seen demand recover strongly since early this year. In the second half it secured wage concessions from staff, dropped several routes and deferred new-aircraft deliveries.

Revenue passenger kilometres dipped 1.6% during the year while seat capacity increased 2.1%. SIA carried 14.8 million passengers, down 1.6% on the previous year, while passenger load factor fell 2.8 percentage points to 74%.

The carrier was hurt by the loss of much of its investment in Air New Zealand (ANZ), which was renationalised in January after it was on the verge of collapsing. SIA's stake was cut from 25% to under 5%, and it was forced to take a charge of S$267 million for its share of the write-down in September of ANZ's Australian subsidiary Ansett, which subsequently collapsed in bankruptcy.

SIA was also hurt by losses at 49% owned Virgin Atlantic Airways. Its share of losses of associated companies amounted to S$66 million during the year, compared with a S$82 million profit contribution the previous year.

SIA changed its aircraft depreciation policy during the year, saving S$265 million for itself and S$10 million for regional subsidiary SilkAir, which made an operating profit of S$17 million, compared with a loss the previous year of S$6 million.

The carrier also benefited from a gain of S$203 million from an engineering-related divestment.

Source: Flight International