$876 MILLION FULL-YEAR PROFIT, BUT FUEL COSTS REMAIN GREATEST CHALLENGE

GROUP FINANCIAL PERFORMANCE
The Group achieved a net profit attributable to equity holders of $873 million for the 2010-11 financial year, an increase of $701.15 million from the $172.89 million profit last financial year, which was adversely affected by the global financial crisis (all figures have been exchanged from SGD to USD, with exchange rate of $1 SGD to $.80 USD on May 16, 2011). The 2010-11 financial year result included an exceptional item of $161.68 million in respect of provision for fines imposed on SIA Cargo [see Note 2 below].

Group revenue grew $1,454.33 million (+14%) to $11,625.81 million as both carriage and yields recovered from depressed levels last financial year. This revenue growth was achieved in a year punctuated by disruptions ranging from volcanic ash in Europe, snowstorms in Europe and USA, floods in Australia, and earthquakes in New Zealand and Japan.

On the cost side, Group expenditure rose $487.44 million (5%) to $10,605.5 million. Fuel costs excluding hedging – the biggest expense item of the Group – increased $701.95 million (24%), as average jet fuel prices surged 26% this financial year. This was partially offset by a smaller loss from fuel hedging ($49.62 million versus $446.62 million).

Consequently, Group operating profit improved from $50.42 million last financial year to $1,0171.31 million for the financial year ended March 31, 2011.

The Parent Airline Company earned an operating profit of $681.14 million in the financial year, representing a turnaround from the operating loss of $31.22 million the previous financial year. All the major companies in the Group recorded improved operating results.

SIA Engineering Operating profit of $108.85 million ($88 million profit in 2009-10)

SIA Cargo Operating profit of $120.86 million ($116.1 million loss in 2009-10)

SilkAir Operating profit of $96.85 million ($39.22 million profit in 2009-10)

Fourth Quarter 2010-11
Group revenue at $2,871 million improved by 8% (+$200.9 million) compared to the corresponding period last financial year, supported by the continued recovery in yields.

However, this was outpaced by increase in Group expenditure of 11% ($261.8 million), mainly from higher fuel cost ($240.12 million) as jet fuel prices spiked 34% year-on-year. This was partially offset by hedging gains of $30.41 million (against hedging losses of $15.21 million).
2011 Group Financial Performance /2

As a result, Group operating profit for the quarter fell $60.03 million (-31%) from the same quarter last financial year to $133 million.

FINAL DIVIDEND OF 32 CENTS
The Board of Directors recommends a final dividend of 32 cents per share (tax exempt, one-tier) to be paid on August 18, 2011 to shareholders as at August 4, 2011.

SPECIAL DIVIDEND OF 64 CENTS
After considering the financial performance and long-term capital adequacy of the Company, the Board is recommending a special dividend of 64 cents per share (tax exempt, one-tier). The proposed distribution will be paid on August 18, 2011 to shareholders as at August 4, 2011. Including the interim dividend of 16 cents per share paid on December 8, 2010 and the proposed final dividend of 32 cents per share to be paid on August 18, 2011, the total dividend for the 2010-11 financial year will be $1.12 per share.

FLEET AND ROUTE DEVELOPMENT
During the January-March quarter, Singapore Airlines decommissioned one B747-400 aircraft. As at March 31, 2011, the operating fleet comprised 108 passenger aircraft – seven B747-400s, sixty-six B777s, nineteen A330-300s, eleven A380-800s and five A340-500s – with an average age of 6 years and 3 months.

A new three-times-weekly service to Sao Paulo via Barcelona was launched on March 28, 2011, marking the addition of South America as the sixth continent in Singapore Airlines’ route network. Flight frequencies to popular destinations, including Hong Kong, Guangzhou, Taipei and Male, have been increased since the start of Northern Summer. Conversely, the Singapore-Los Angeles non-stop service has been reduced from seven to five flights per week.

In the year to March 2012, the Company expects to take delivery of eight A380-800s and decommission five B777s and all seven B747-400s. The net decrease of four aircraft will bring the operating fleet to a total of 104 aircraft by March 2012. The reduction in fleet size will be more than offset by increased utilization to produce passenger capacity growth of 6 per cent in available seat-kilometers for the 2011-12 financial year.

SUBSEQUENT EVENTS
On April 6, 2011, SIA Engineering Company and Panasonic Avionics Corporation together formed a joint venture in Singapore – Panasonic Avionics Services Singapore. SIA Engineering Company injected a paid-up capital of $2.125 million, equivalent to a shareholding of 42.5%.

On April 15, 2011, Singapore Airlines and SilkAir announced an increase of the fuel surcharge on tickets issued on or after April 21, 2011. The adjustments will offer only partial relief of higher operating costs arising from the recent jump in jet fuel prices.

2011 Group Financial Performance /3

On April 25, 2011, SIA Cargo injected $50.82 million in cash into China Cargo Airlines Ltd (CK) for a 16% share of the new company. Great Wall Airline’s (GWL) assets and liabilities will be purchased by CK and GWL will accordingly be liquidated. The proceeds of the liquidation will be returned to shareholders of GWL.

OUTLOOK
The year ahead is expected to be challenging for the airline industry.

The uncertain global economic outlook is manifested by the recent Standard & Poor downgrade of the US debt outlook from stable to negative, and continual fears of a sovereign debt crisis in Europe. In addition, the concerns over nuclear radiation in Japan following the March 11 earthquake continue to impact air traffic to and from Japan. These effects are reflected in forward bookings, indicating near term weakness in load factors.

The average price of jet fuel has surged by more than 25% between January 2011 and April 2011, to $140 per barrel, the highest level since the last peak at $174 per barrel recorded in July 2008. While there has been some respite in the past week, jet fuel prices are likely to remain high and volatile in the near term.

The twin challenges of near term weakness in load factors and high fuel prices will adversely affect operating performance of airlines. The Company remains committed to staying lean and competitive. The Company will be vigilant in cost management and closely monitor patterns of demand and adjust capacity accordingly.

Note 1: The SIA Group’s audited financial results for the financial year ended March 31, 2011 were announced on May 12, 2011. A summary of the financial and operating statistics is shown in Annex A. (All monetary figures are in Singapore Dollars. The Company refers to Singapore Airlines, the parent airline unit. The Group comprises the Company and its subsidiary, joint venture and associated companies).

Note 2: The $161.68 million provision comprised the plea offer as agreed with the United States
Department of Justice Antitrust Division ($48 million), the fine imposed by the European Commission, and the fine imposed by the South Korean Fair Trade Commission. SIA Cargo has paid the fines as required by law and has filed appeals against these fines imposed by the European Commission and the South Korean Fair Trade Commission.