- POSTED: 06 Feb 2014 20:20
Singapore Airlines has posted a worse-than-expected 65 per cent fall in third quarter net profit, hurt by one-off expenses incurred by SIA Cargo and Tiger Airways.
SINGAPORE: Singapore Airlines (SIA) reported on Thursday a worse-than-expected 65 per cent fall in third quarter net profit, hurt by one-off expenses incurred by their SIA Cargo and Tiger Airways units.
Net profit for the three months ended December 2013 came in at S$50.1 million, down from S$142.5 million in the same period a year ago.
The Singapore flag carrier warned of tough conditions in coming months "with airlines offering aggressive fares amid increasing capacity and fuel prices remaining high by historical standards".
SIA said the drop in net profit was due to the S$78 million paid by SIA Cargo to settle a class action suit in the United States.
Tiger Airways also contributed to the earnings decline, as it booked impairment losses in Tigerair Mandala as well as losses from the sale of assets belonging to Tigerair Philippines
Excluding the one-off losses, SIA said its group net profit would have risen by 23 per cent.
SIA and regional arm SilkAir are facing increasing competition from budget carriers such as AirAsia as well as full-serviced rivals such as Qantas and Emirates, resulting in depressed margins.
While SIA itself managed to boost operating profit to S$130 million during the quarter from S$87 million a year ago, SilkAir's operating profit plunged to S$6 million from S$34 million.
"Advance passenger bookings for the fourth quarter (Jan-Mar) are slightly lagging the planned capacity increase, due to the shift in Easter holiday travel demand from March last year to April this year," SIA said.
"Efforts to stimulate demand to boost loads will continue to place pressure on yields."