* Warns of weak bookings, slower demand * Sees signs of weakness in advance bookings * Fuel prices retreated but volatile currency is new threat
By
Karamjit Kaur, Aviation Correspondent
Singapore Air has seen declining passenger demand this year as the global economic slowdown crimps corporate and leisure travel. -- ST PHOTO: ASHLEIGH SIM
A SHARP jump in its fuel spending and weaker bookings dragged second-quarter profits of Singapore Airlines 36.2 per cent lower to $324 million.
Lower earnings at SIA's ground-handling arm, Singapore Airport Terminal Services (Sats) and SIA Engineering, also hit the bottom line.
Although revenue for the three months ended Sept 30 rose 10.4 per cent from last year to $412 million on the back of more passengers flown, expenditure was up by a higher 20.3 per cent, said SIA in a statement on Thursday.
The carrier flew 4.85 million passengers in the quarter.
At 1.4 per cent higher than last year, it was the smallest increase in more than three years. Across its network, the airline also filled fewer seats - an average of 79.1 per cent compared with 81.6 per cent a year earlier.
Half-year numbers were just a little better. Earnings fell 26.8 per cent to $682 million.
In the six months to end-Sept, spending on fuel rose by $1.59 billion or 66.3 per cent.
The average price of jet fuel in the first half of the current financial year went up 75.8 per cent year-on-year from US$88 (S$130.68) per barrel to US$155 per barrel. Total expenditure rose 20.1 per cent to almost $8 billion, outstripping the 12.1 per cent increase in turnover to $8.5 billion.
Of the airline's subsidiary companies, SIA Cargo took a big hit, with a $76 million loss in operating profits. SIA's regional arm SilkAir saw profits dip 44.6 per cent to $5 million.
On the outlook, SIA said it is 'stormy weather ahead.'
SIA reported that earnings per share for the quarter dropped from 40.8 cents a year ago to 27.3 cents, while net asset value per share was $12.26 as at Sept 30, down from $12.77 as at March 31.
The airline has declared an interim dividend of 20 cents per share.
The financial turmoil around the world has hit consumer confidence, which in turn is affecting demand for air travel.
According to latest data released by the International Air Transport Association (Iata), global international passenger traffic in Sept fell 2.9 per cent, compared to the same month last year.
It was the first year-on-year dip in five years. While fuel prices have retreated in recent weeks, spending on oil remains the biggest single cost item in the books, SIA said.
Consumer pressure has also led to two rounds of cuts in fuel surcharges.
In response to weaker demand, many airlines have cut capacity in the last few months.
