Record revenues and passenger loads - the average number of seats filled per aircraft - failed to lift profits at Singapore Airlines (SIA), which fell 47.5 per cent for the year to end-March to $683 million.
The decline was due mainly to higher fuel prices as well as costs incurred in preparation for SilkAir's merger with the parent airline. Departments and divisions are progressively being integrated, though the actual merger is expected to happen only after next year.
The SIA group reported yesterday that it had a solid operating profit of $1.07 billion for the 12 months to March 31, amid a challenging market environment.
During the year, SIA carriers - the parent airline, SilkAir and Scoot - filled an average of 83 per cent of all seats. This was a record for the group.
However, spending increased by 7 per cent or $999 million, with higher net fuel cost accounting for two-thirds of the increase.
In the fourth quarter covering January to March, net profit dipped by 27.8 per cent to $203 million.
SIA said future passenger bookings for most key markets, including those that have seen significant capacity growth such as the United States, Japan, Indonesia and New Zealand, continue to grow at a healthy pace. However, China's international traffic growth rates have softened, at a time of increased supply in the market.
Notwithstanding the current demand picture, ongoing trade disputes and slowing economic growth in key markets pose uncertainty to the operating environment, it added.
Efforts will be made to capture opportunities and mitigate any arising weaknesses in both the cargo and passenger segments, SIA said.
Issues related to the Boeing 737 Max 8 fleet, which have led to its suspension from service until further notice, as well as issues with Rolls-Royce Trent 1000 TEN engines powering Boeing 787s, have affected the group's passenger capacity growth, SIA said.
"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," the airline added.
SIA will pay shareholders a final dividend of 22 cents per share for the financial year.
Including the interim dividend of 8 cents per share paid in December, the total dividend for the 2018/19 financial year will be 30 cents per share.