Singapore Airlines 2006 Annual Report Download - page 55
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53
Singapore Airlines Annual Report 05/06
Performance of the Company (continued)
Expenditure (continued)
Expenditure on fuel was $1,220 million higher because of:
$ million
4.3% increase in volume uplifted from 1,124.27 M AG to 1,172.15 M AG + 101
39.7% increase in weighted average fuel price from 129.95 US¢/AG to 181.58 US¢/AG + 1,022
1.0% weakening of USD against SGD from US$1=S$1.678 to US$1=S$1.661 – 39
+ 1,084
Lower hedging gain + 136
+ 1,220
Staff costs increased $18 million mainly due to (i) higher average staff strength (+157) and (ii) higher allowances for crew (such
as meal and nightstop allowances), arising from an increase in capacity of 4.6 per cent, in terms of available seat kilometres,
partially offset by (iii) lower provision for profit-sharing bonus this year.
Depreciation charges increased $56 million mainly due to (i) the commissioning of one B777-300 aircraft during the year;
(ii) the full year’s impact of three B777-300, two B777-200 and two A340-500 aircraft commissioned in the previous year;
(iii) capitalisation of expenditure for heavy maintenance visits on aircraft and engine overhauls (prior to the current financial year,
such costs have been charged to the profit and loss account on an incurred basis); and (iv) impairment charge of A310-300 fleet
during the year. The increase was partially offset by (i) full year’s impact of sale of four B747-400 aircraft, trade-in of two
B747-400 and one A310-300 aircraft, and sale and leaseback of two B777-200ER and one B777-300 aircraft last year; (ii) sale of
one B747-400 and two A310-300 aircraft, and trade-in of one B747-400 and two A310-300 aircraft during the year.
Handling costs, at $733 million, was 1.6 per cent more than last year due to the increase in the number of flights operated,
partially offset by lower handling rates.
Sales costs decreased $26 million from the year before, mainly due to a reduction in agency commission rates and introduction of
more stringent and productive incentives schemes which led to reduced incentive payouts.
Inflight meals and other passenger costs rose $8 million as a result of more passengers carried (+6.6 per cent), partially offset by
lower inflight meal rates.
Airport and overflying charges were $14 million higher compared to last year due to an increase in the number of flights operated.
Aircraft maintenance and overhaul costs fell $280 million due mainly to implementation of new Financial Reporting Standard (FRS)
16 effective from 1 April 2005 which requires the expenditure relating to heavy maintenance visits on aircraft and engine overhauls
to be capitalised. Prior to the current financial year, such costs have been charged to profit and loss account on an incurred basis.
FINANCIAL REVIEW