Bangkok--2 Aug--Centre for Asia Pacific Aviation Singapore Airlines (SIA) reported a 69% surge in operating profit in the three months ended 30-Jun-07, thanks to continued buoyant passenger demand. Passenger yield rose a strong 8.5%, while unit costs rose 6.7%, leading to a 1.2 ppt reduction in break-even passenger load factor to 69.6%. The actual passenger load factor was 9.3 ppts higher than breakeven, rising 3.3 ppts in the quarter year-on-year to 78.9%. The earnings result was better than market expectations and SIA is confident the good news will continue to flow, reporting high forward bookings across all regions in the second quarter (to 30-Sep-07), especially in the premium cabins. Passenger capacity fell 1.2% in the first quarter, but growth will resume later in the year with the delivery of four more B777-300ERs and three A380-800s by Mar-08. Even so, passenger capacity is expected to grow by just 1% for the full financial year ending 31-Mar-08 — the slowest rate of growth since 2003/04 when the SARS outbreak led to an 11% reduction in capacity that financial year. Meanwhile, the cargo segment remains weak, with cargo yield falling 6.5% in the first quarter. The cargo unit reported a load factor of 62.1% - some 3.2 ppts below the break-even level, despite trimming capacity by 0.8%. Meanwhile Singapore Airport Terminal Services and SIA Engineering Company saw profits slip 4.2% and 11.8%, respectively, in the first quarter year-on-year. Fuel also remains a “significant challenge” to earnings with price volatility continuing to be a key variable to financial performance, according to SIA. Qantas CEO, Geoff Dixon, echoed these sentiments yesterday, stating the cost of aviation fuel is a "continuing and very complex challenge." The Australian carrier is raising its fuel surcharges next week, following moves by SIA and others to levels last seen around this time in 2006. Fuel prices started to decline from their highs in Aug-06 — and a repeat performance would be warmly welcomed by airlines this year.Note to editors:About Centre for Asia Pacific Aviation The Centre for Asia Pacific Aviation (CAPA) was founded in 1990 and has since built an international reputation as the leading specialist aviation consultancy in the Asia Pacific, the Indian Subcontinent and Middle East regions. CAPA Consulting’s strategic advisory services are supported by the extensive information and data services provided by the Centre’s Market Research Unit to aviation industry leaders every day. The Centre also holds regular Aviation Leadership Summits, which provide unique opportunities for the exchange of ideas and experiences. Head Office, Sydney: Derek Sadubin, Chief Operating Officer Aurora Place, Level 36, 88 Phillip St Sydney PO Box N777, Grosvenor Place Sydney, NSW Australia 2000 Email: [email protected] Southeast Asia Regional Office: Richard Pinkham, Regional Director, Southeast Asia Email: [email protected] Indian Subcontinent and Middle East Office: Kapil Kaul, CEO Indian Subcontinent & Middle East Email: [email protected] UK/Europe Office: David Bentley, UK Associate Email: [email protected] North America Regional Office: Martti Raito, Regional Director, North America Email: [email protected] North Asia Representatives: Korea: Kyung-sup Lee. Email: [email protected] Japan: Reiko Sonoyama. Email: [email protected] More information is available on the Centre’s website: www.centreforaviation.com