SINGAPORE: Profits plunged at Singapore Airlines (SIA) in the second quarter amid a sluggish global economy and aggressive competition that continues to put pressure on fares and yields.
Earnings fell by almost 70 per cent to $64.9 million in the three months to Sept 30, from $213.6 million in the same quarter last year. Turnover slid 5.1 per cent to $3.65 billion.
The poor performance was also due in part to lower dividends from long-term investments and weaker results from associated companies, SIA said yesterday. The situation was less dire at the operating level with profits down by 15.5 per cent to $109 million, as a $174 million fall in expenditure was insufficient to cushion a $194 million reduction in revenue.
SIA and its regional arm SilkAir both recorded weaker operating profits in the second quarter while the group’s low-cost arms, Scoot and Tigerair, did better on the back of an extended network and reduced operating expenditure. The stronger first quarter bolstered half-year numbers, with group profit up 5.6 per cent to $321.5 million compared with the same six months last year.
Operating profit grew 25.8 per cent to $302 million although revenue dipped 3.6 per cent to $7.3 billion. Spending in the six months fell 4.6 per cent to about $7 billion.
The future remains challenging, analysts said. Mr Brendan Sobie from the Centre for Aviation said yesterday: “Competition continues to intensify and some competitors have been very aggressive in key markets. The long-haul market has become particularly challenging with overcapacity and extremely low pricing from South-east Asia to Europe and North America. “One cannot understate the structural changes in the market that SIA has had to contend with as well as some hopefully temporary reductions in demand.”
