Singapore Airlines’ Q2 profit sinks

SINGAPORE: Singapore Airlines yesterday reported an 81% plunge in second-quarter earnings, hurt by higher fuel prices, lower airfares and non-cash losses at its partowned Virgin Australia.

The airline said bookings in the coming months were expected to be stronger year-on-year.

“However, headwinds continue to persist in the form of cost pressures arising from significantly elevated fuel prices compared to a year ago, as well as keen competition in key operating markets,” Singapore Airlines said in a statement.

The carrier, a benchmark for Asia’s premium airline industry, posted a net profit of S$56 million (US$40.5 million) for the quarter ended Sept 30, down from S$293 million a year earlier.

The prior-year figure was restated due to accounting changes.

Excluding the S$116 million loss relating to its 20% stake in Virgin Australia, the company reported an adjusted net profit of S$172 million, down 41% from a year earlier.

Group revenue rose 5.4% to S$4.06 billion during the quarter as the airline added capacity and filled a higher proportion of seats.

However, yields, a proxy for ticket prices, fell 2.2% in the second quarter compared with a year earlier, failing to help offset the impact of a 24% rise in fuel prices.

That yield decline was less steep than a first-quarter decrease of 3.2% but bucks a broader global industry trend toward rising fares, including at regional rivals like Hong Kong’s Cathay Pacific and Australia’s Qantas Airways.

Singapore Airlines is in the second year of a three-year transformation plan designed to cut costs and boost revenue. It plans to merge regional arm SilkAir into its main brand after 2020.

Its low-cost carrier Scoot, which raised fares by around 5% from Sept 1 in reaction to higher oil prices, swung to an S$11 million operating loss during the second quarter from a S$2 million profit a year earlier.