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Singapore Airlines profit plunges despite record revenue

Singapore Airlines profit plunges despite record revenue

Singapore Airlines at Changi Airport. (Photo: Roslan RAHMAN/AFP)

SINGAPORE: Singapore Airlines Ltd on Thursday (May 16) reported its highest-ever annual revenue on a jump in passengers, though higher fuel costs nearly halved its profit.

Revenue rose 3.3 per cent to S$16.32 billion for the year ended Mar 31, as the number of passengers it carried jumped 7.2 per cent.

Passenger load factor for the group's carriers, which includes Singapore Airlines, SilkAir and Scoot, rose to a record 83 per cent.

The airline group's net profit fell 47.5 per cent to S$682.7 million from S$1.3 billion a year earlier, when the figures were restated to reflect accounting changes.

Expenditure for the Group rose by 7 per cent or S$999 million with higher net fuel cost contributing two thirds of the increase.

Fuel expenditure climbed 17.6 per cent, or S$688 million, as jet fuel prices rose by an average 21.6 per cent during the year, the airline said.

Oil prices have been rising due to growing tensions between the United States and crude-rich Iran.

It also added that "net finance charges increased ... as the group raised more borrowings during the year for aircraft purchases".

Some of the expenses stemmed from overhauling the fleet of its regional wing SilkAir, which is changing from Airbus to Boeing aircraft, as well as restructuring costs as it prepares to merge SilkAir into the parent airline.

READ: Singapore Airlines plans wide-ranging initiatives to 'reclaim market leadership'

The airline said the suspension of flights involving Boeing 737 MAX 8 planes operated by SilkAir, and issues with Rolls-Royce engines that power its 787 Dreamliner fleet, had hit passenger capacity.

SilkAir grounded its 737 MAX 8 planes in March after an Ethiopian Airlines plane crashed, killing all 157 on board. It was the second fatal accident for the MAX 8 passenger jet in six months, after a crash in Indonesia.

READ: Singapore grounds Boeing 737 MAX aircraft after 2 deadly crashes

READ: SilkAir drops 4 flights in second wave of cancellations amid Boeing 737 MAX 8 grounding

The national carrier said bookings in the months ahead indicate robust demand, but warned against the impact of trade disputes and slowing economic growth in key markets.

It said that most key markets continue to grow at a healthy pace, including the US, Japan, Indonesia and New Zealand. However, China's international traffic growth rates have softened.

Singapore Airlines forecast group passenger capacity growth of 6 per cent, lower than the 6.4 per cent recorded in last financial year, weighed down by issues related to its Boeing 737 MAX 8 fleet and Rolls-Royce Trent 1000 TEN engines.

The carrier last month also grounded two Boeing 787-10 jets fitted with Rolls-Royce Holdings PLC Trent 1000 TEN engines after checks of its fleet found premature blade deterioration.

"The group wishes to assure customers that the safety of its passengers and crew is of utmost importance, and only aircraft and engines that have been certified fit to fly will be returned to service," it said.

The board recommended a final dividend of 22 cents per share for the financial year. 

Source: AGENCIES/cna/nh(hm)


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