Earnings at SIA nosedive almost 70% to $64.9 million in Q2 amid sluggish global economy

Singapore Airlines planes lined up at the Changi Airport on April 21, 2012.
Singapore Airlines planes lined up at the Changi Airport on April 21, 2012. ST PHOTO: ALPHONSUS CHERN

SINGAPORE - Profits at Singapore Airlines plunged in the second quarter amid a sluggish global economy.

Earnings in the three months to end-September fell by almost 70 per cent to $64.9 million compared to the same quarter last year, the airline reported on Thursday.

Group operating profit in the three months declined $20 million or by 15.5 per cent to $109 million, as the $174 million fall in expenditure was insufficient to cushion the $194 million reduction in revenue.

Most companies in the group recorded weaker operating profits except for Scoot and Tigerair which registered improvements year-on-year as the low-cost carriers continued to perform better on the back of an extended network and reduced operating expenditure.

Bolstered by a stronger first quarter, profits for the first half of the current financial year increased 5.6 per cent to $322 million compared with the same April to September period last year.

Operating profits grew 25.8 per cent to $302 million even as revenues dipped by 3.6 per cent to $7.3 billion.

Spending in the six months fell 4.6 per cent to about $7 billion.

SIA has declared an interim dividend of nine cents per share, down by a cent compared to the same period last year.

Looking ahead, the airline said the business continues to be impacted by geopolitical uncertainty and weak global economic conditions with the outlook in most major economies remaining tepid.

"Furthermore, excess capacity and aggressive pricing continue to persist in the market, exerting pressure on loads and yields" SIA said.

The outlook for the cargo business also remains challenging as yields are expected to stay under pressure due to overcapacity in the air cargo industry.

Efforts will continue to be focused on higher-yielding product segments to improve the overall traffic mix.

Fuel prices also remain volatile.

SIA will remain nimble and flexible, leveraging its portfolio of airlines to cater to demand in different travel markets, while maintaining cost vigilance, the carrier said.

The improved operating capability and efficiency of the growing Airbus A350 fleet is enabling the launch of previously unserved new routes, while the deep integration between Scoot and Tiger Airways continues to provide cost efficiencies and opportunities to enhance network connectivity.

Both the full-service and low-cost airline segments are boosting the group's competitiveness and are offering new opportunities for expansion.