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SINGAPORE: May 19, 2017. The Singapore Airlines Group (SIA) has reported a 55.2 percent drop in net profit to S$360.4 million for its 2016/17 financial year ending March 31 on revenues of S$14.86 billion.

SIA also reported a net loss of S$138 million in its fourth quarter January-March 2017 compared to a S$225 million net profit in the same period last year.

In addition to a S$58 million decline in operating profit for the year, the airline said the fall in net profit was largely attributable to SIA Cargo's S$132 million provision for "competition-related matters", and the need to return U$117 million to the European Commission after it re-imposed a cartel fine.

SIA 747F SIA Cargo reported an operating profit of S$3 million for the financial year following a loss of $50 million in 2015/16 - despite a drop of S$87 million in revenue due to a 10.3 percent fall in yields.

Freight carriage grew 5.9 percent during the 12-month period as capacity grew 3.8 percent resulting in a 1.3 increase in cargo load factor to 63.2 percent. SIA Cargo said its fleet of seven B747 freighters will remain unchanged for its current financial year.

Acknowledging intense pressure on yields in major markets coupled with geopolitical and economic uncertainties, SIA said it is incorporating SIA Cargo back into Singapore Airlines as a division of the company, "in a move intended to improve efficiency through greater synergy with the wider SIA Group," it said.

The new 'Cargo Division' will be operational by the first half of 2018 and continue to market its freighter fleet and the passenger aircraft bellyhold space of SIA, SilkAir and Scoot.

SIA Cargo was launched in 2001 as a separate company to operate up to 17 B747 freighters. Since then, structural changes in the airfreight market have prompted the airline to reduce its freighter fleet and carry more cargo on passenger aircraft.

"Re-integrating SIA Cargo as a division within Singapore Airlines makes sense from a business standpoint. It will improve efficiency and offer greater flexibility for staff deployment by maximizing synergies with the larger SIA business," said SIA CEO Goh Choon Phong.

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