Singapore Airlines’ profit drops 71%
Singapore Airlines said on July 30 its first-quarter net profit fell 71 per cent as revenue weakened and it remains under pressure to sell seats at a discount due to stiff competition.
Net profit for the three months ended June 30 fell to 35 million Singapore dollars ($28 million) from S$122 million a year earlier, the company said in a statement to Singapore Exchange, marking its third consecutive decline in quarterly net profit.
The premium carrier said revenue fell 4.1 per cent to S$3.68 billion as the company was forced to sell more seats at a discount to fill its planes.
“Aggressive fares and capacity injections from competitors will continue to place pressure on yields.” However, load factors, or the proportion of its planes filled, will likely stay stable, the airline said.
Passenger yield, or revenue per passenger per kilometer flown, declined 1.8 per cent from a year earlier to 10.9 Singapore cents in the quarter, it said. Analysts consider yields to be a critical measure of an airline’s profitability as it shows how much pricing power the carrier has.
Demand for air travel in Asia hasn’t grown as fast as the region’s premium airlines initially expected. In addition, the region’s carriers face competition from highly aggressive budget airlines such as Malaysia’s AirAsia on shorter routes within the region and from Gulf-based carriers such as Emirates Airline and Qatar Airways on their longer routes to Europe and the US.
Most full-service airlines in Southeast Asia reported a loss last year as they were forced to offer steep discounts to fill their planes.
Singapore Airlines has sought to focus on markets such as China, India, Australia and Japan where it hopes to keep its loyal customers who value its premium product. It became the first airline to fly the Airbus A380, the biggest passenger plane, to New Delhi and Mumbai from May 31. It also increased flights to Shanghai and Beijing.
SilkAir, the regional unit of Singapore Airlines, also reported a sharp decline in operating profit to S$2 million in the first quarter from S$14 million a year earlier. SIA Cargo, the freight unit, narrowed its operational loss to S$18 million from S$40 million as it reduced capacity to match demand, according to the statement.
Singapore Airlines said it expects overcapacity to hurt its cargo business, though demand for airfreight is slowly recovering.
Singapore Airlines said on July 30 its first-quarter net profit fell 71 per cent as revenue weakened and it remains under pressure to sell seats at a discount due to stiff competition. Net profit for the three months ended June 30 fell to 35 million Singapore dollars ($28 million) from S$122 million a year earlier, the company said in a statement to Singapore Exchange, marking its third consecutive decline in quarterly net profit. The premium carrier said revenue fell 4.1 per cent to S$3.68 billion as the company was forced to sell more seats at a discount to fill its...
Singapore Airlines said on July 30 its first-quarter net profit fell 71 per cent as revenue weakened and it remains under pressure to sell seats at a discount due to stiff competition.
Net profit for the three months ended June 30 fell to 35 million Singapore dollars ($28 million) from S$122 million a year earlier, the company said in a statement to Singapore Exchange, marking its third consecutive decline in quarterly net profit.
The premium carrier said revenue fell 4.1 per cent to S$3.68 billion as the company was forced to sell more seats at a discount to fill its planes.
“Aggressive fares and capacity injections from competitors will continue to place pressure on yields.” However, load factors, or the proportion of its planes filled, will likely stay stable, the airline said.
Passenger yield, or revenue per passenger per kilometer flown, declined 1.8 per cent from a year earlier to 10.9 Singapore cents in the quarter, it said. Analysts consider yields to be a critical measure of an airline’s profitability as it shows how much pricing power the carrier has.
Demand for air travel in Asia hasn’t grown as fast as the region’s premium airlines initially expected. In addition, the region’s carriers face competition from highly aggressive budget airlines such as Malaysia’s AirAsia on shorter routes within the region and from Gulf-based carriers such as Emirates Airline and Qatar Airways on their longer routes to Europe and the US.
Most full-service airlines in Southeast Asia reported a loss last year as they were forced to offer steep discounts to fill their planes.
Singapore Airlines has sought to focus on markets such as China, India, Australia and Japan where it hopes to keep its loyal customers who value its premium product. It became the first airline to fly the Airbus A380, the biggest passenger plane, to New Delhi and Mumbai from May 31. It also increased flights to Shanghai and Beijing.
SilkAir, the regional unit of Singapore Airlines, also reported a sharp decline in operating profit to S$2 million in the first quarter from S$14 million a year earlier. SIA Cargo, the freight unit, narrowed its operational loss to S$18 million from S$40 million as it reduced capacity to match demand, according to the statement.
Singapore Airlines said it expects overcapacity to hurt its cargo business, though demand for airfreight is slowly recovering.
