Singapore Airlines profit drops 36% amid weak-yield environment
Reuters file photo
SINGAPORE — Singapore Airlines (SIA), South-east Asia’s biggest carrier, posted a 36 per cent drop in third-quarter net profit as passenger numbers declined and the company wrote down the value of a budget unit’s brand.
Net income in the three months through December fell to S$177.2 million from S$274.9 million a year ago, with the drop attributed to a S$79 million writedown due to the rebranding of Tigerair, SIA said in a statement. Revenue slipped 2 per cent to S$3.8 billion.
The marquee carrier, which is battling overcapacity and aggressive pricing by budget airlines in the region, said 2017 will be another challenging year amid “tepid global economic conditions and geopolitical concerns”. Hong Kong-based rival Cathay Pacific Airways said last month that it will eliminate some positions as part of a business review, with key changes set to kick in by mid-year.
To counter some of the challenges posed by Middle Eastern and budget airlines, Singapore Airlines has been adding fuel-efficient aircraft to its fleet and teaming up with other carriers to offer more destinations.
The decline in operating profit at the parent airline during the quarter was the steepest at about 17 per cent, while it was 9 per cent at SilkAir. Scoot recorded an 11 per cent increase.
Earnings highlights:
- Third-quarter fuel-hedging loss at S$42.2 million vs S$298.6 million
- Company entered into longer-dated Brent hedges; has hedged 37.4 per cent of jet fuel at an average of US$67/barrel
- Passenger, cargo loads, yields under pressure
- Main carrier’s third-quarter operating profit at S$151 million vs S$181 million; SilkAir at S$30 million vs S$ 33 million; Scoot at S$20 million vs S$18 million; Tigerair unchanged at S$9 million. BLOOMBERG
