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Don't keep thinking of companies closing down... Because companies will never close down. But companies' share price is a completely different matter... it can go down very very low!!! in bad times...
Because no one believed share prices can go very low, they suffer big losses...Because they keep buying when it becomes cheaper and cheaper each month... hehehe... 
This only highlights the real importance of stock market education!
Feb 10, 2009
SIA Q3 profit down 43%
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SIA said it suffered hedging losses of $341 million due to the sharp drop in fuel prices during the quarter. -- PHOTO: AIRBUS
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SIA, one of Asia's major airlines, forecast a bleak outlook for this year, confirming projections by economists that the global economic situation will worsen before improving.
The airline became the latest major carrier to report a big profit fall or losses during the global economic slowdown, which has hurt travel worldwide.
Net profit came in at $337 million, from $590 million, on revenue of $4.16 billion which was down 2.6 per cent year on year, the airline said in a statement.
SIA said it carried 4.8 million passengers in the October to December period, down 4.2 per cent from the same quarter the year before as travel demand took a hit.
It also carried 14.2 per cent less freight during the quarter, mirroring a sharp fall in global trade as economies worldwide reel from the impact of the financial crisis.
'Demand for air transportation is expected to remain weak for much of 2009,' SIA warned. 'The company will continue to monitor the patterns of demand and make appropriate adjustments to flight schedules and capacity while managing costs tightly.'
SIA announced late last month the suspension of some international flights, saying it did not want to fly half-empty planes around the world. Flights to India, South-east Asia, the United States and Europe were among those affected. The airline said it was also reducing its all-business-class service to New York and Los Angeles.
In its statement on Tuesday, SIA said group expenditure rose 5.7 per cent, as gains from declining jet fuel prices were eroded by hedging losses totalling $341 million.
'Foreign exchange rate movements lowered operating profit by $144 million as major revenue generating currencies, particularly the Australian dollar, the UK pound and the euro, weakened against the Singapore dollar, even as the Japanese yen and the US dollar strengthened,' it said.
SIA shares closed four cents higher at $10.44 prior to the announcement.
Airlines in the Asia-Pacific region are cutting routes and taking other measures in a bid to deal with the drastic drop in travellers and cargo, and analysts said some carriers may be forced to slash jobs.
The region was the airline industry's booming market in recent years but its international passenger traffic fell 9.7 per cent in December over the previous year, the sharpest decline in any region, the International Air Transport Association (IATA) has said.
Regional airlines, which account for 45 per cent of global cargo, also registered the steepest fall in freight traffic, with a 26 per cent decline last month, said IATA, the industry's trade organisation.
Japan Airlines, Asia's largest carrier, said this month it expected a net loss of 34 billion yen (S$560 million) in the year to March, scrapping an earlier forecast for a 13-billion-yen annual net profit.
All Nippon Airways (ANA) is now projecting a loss of nine billion yen for the financial year to March 31 instead of a profit.
South Korea's largest airline, Korean Air, this month reported a sharply higher net loss of 659.5 billion won (S$709.9 million) in the fourth quarter. -- AFP
from Busimess Times
Published February 7, 2009  |
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UOB-Kay Hian sees SIA reporting $2.1b hedging loss
By VEN SREENIVASAN
SINGAPORE Airlines (SIA) will report a huge $2.1 billion hedging loss equivalent to a loss per share of $1.70, says a local analyst.
K Ajith of UOB-Kay Hian calculates that with jet fuel having slumped from US$119 a barrel in October 2008 to US$54 by year-end, SIA will suffer a hedging loss that will depress its book value from $12.25 a share to $10.55. The estimate is based on SIA's mark-to-market accounting of its outlay on fuel, which UOB-Kay Hian estimates to be hedged at an average of about US$110 a barrel. 'At present, SIA is trading at 0.9 times P/B. And if it remains at 0.9 times with book value dropped, it should trade at a reduced target price of $9.70,' says UOB-Kay Hian. SIA, which will report its third-quarter earnings on Feb 10, slid 32 cents to close at $10.74 yesterday. The impact of the hedging loss is not new - SIA chief executive Chew Choon Seng said at the Q2 results briefing three months ago that fuel was hedged around $115 a barrel. But this is the first time an analyst has worked out the potential loss, albeit that this is a paper loss at present. Some analysts, such as Vincent Ng of S&P Equity Research, warn against reading too much into paper losses on fuel hedging. 'Hedge accounting generally goes straight to the reserves in the balance sheet, rather than the profit-and-loss account,' he explained. 'Meanwhile, SIA also pays spot prices for half of its fuel needs.' Also, SIA's hedge contracts go forward some 18 months from the contract date, by which time the actual fuel price could climb back closer to the hedged price. Nevertheless, few have reason to be upbeat on SIA's immediate prospects - or those of the aviation sector as a whole. The industry is in a tailspin thanks to the global economic slowdown and the financial meltdown. Passenger and cargo traffic have dived, and combined with excess capacity, this has put pressure on yields. Analysts expect SIA to have suffered a 10-15 per cent drop in passenger yield in the October-December 2008 quarter due to falling premium seat sales and falls in the key Australian and British currencies against the Sing dollar. Meanwhile, air cargo operations have been racking up losses since the first half of the current financial year, prompting SIA to start grounding planes and to ask pilots to take no-pay leave. SIA has cut capacity about 3 per cent system-wide over the past two months, including scrapping of several of its relatively recent all-business class non-stop services to New York and Los Angeles. One of the more upbeat forecasts for SIA is from CIMB's Raymond Yap, who sees a Q3 net profit of $385.6 million, down 35 per cent year-on-year. But Mr Yap expects SIA to post a net profit of only $55.8 million for the January-March quarter, which is traditionally slow. 'If we are correct, SIA could achieve a full-year net profit of $1.253.8 billion, about 10 per cent higher than our official forecast of $1.137 billion, but down almost 40 per cent from a year ago,' he said in a paper yesterday. UOB-Kay Hian's Mr Ajith expects operating profit to decline to $118 million in Q3 2009. He is forecasting an FY 2009 net profit of $915.3 million, below the consensus estimate of $1.1 billion. Citigroup Global Markets is also downbeat on SIA and has a medium-term price target of $9. Besides the tough operating environment, contributions from subsidiaries and associates will be under pressure, Citigroup said. 'SIA would be earning an ROE well below its cost of capital, which suggests that its share price could trade below book value during this stage of the economic downturn,' Citi analyst Robert Kong noted this week. 'With earnings and price performance volatile, it is difficult to have a long-run fair value for an airline stock.' Citi forecasts SIA's FY 2010 return on equity will fall to 6.7 per cent, from 9.6 per cent in FY 2009. Going forward, the issue for SIA is how it manages capacity and costs amid deteriorating demand, analysts say. | ||||||||||||||
It may be still early to say the economy is down...
It obviously isn't down yet...