Singapore Air's Net Profit Drops 55 Percent

Singapore Air's Net Profit Drops 55 Percent

The carrier said it suffered a net loss of Sg$138.3 million ($99.4 million) in the fourth quarter to March as operating profit tumbled and the airline made a provision for its cargo business.

Singapore Airlines (SIA) reported a 55 percent drop in full year net profit as a soft fourth quarter hit the overall result.

"Intense competition arising from excess capacity in major markets, alongside geopolitical and economic uncertainty, continue to exert pressure on yields, " the airline said, adding that fuel prices had also risen $US37.90 per barrel in January, 2016, to $US61.90 in March, 2017. The aim is to "identify new revenue-generation opportunities", SIA said in a press statement on May 18, 2017.

This is its first loss in five years.

As part of efforts to adapt to this new environment, SIA established Scoot to capture a slice of the growling low-priced long-haul market, while it recently took full control of short-haul LCC Tigerair Singapore.

SIA said full year revenue across the airline group was down 2.4 per cent to S$14.87 billion. It also expected its decision to operate Scoot and Tiger under the Scoot brand to deliver advantages.

On a positive note, the group maintains that strategic initiatives implemented to address structural changes in the industry are now showing positive results.

The process, aimed at improving efficiency, is expected to be completed in the first half of 2018. RPK (revenue passenger km) traffic was up 2.6 percent on an ASK (available seat km) capacity increase of 3.6 percent.

"It would be interesting to see how Singapore Air Group's transformation plans compare with Cathay's", said Ms Corrine Png, chief executive officer at Crucial Perspective Pte in Singapore. Load factor slipped to 79%.

Operating profit for the Parent Airline Company declined $99m or 20.4% year-on-year, to $386m.

SilkAir achieved an 11 per cent improvement in operating profit to S$101 million, while Budget Aviation Holdings (the umbrella company for Tigerair and Scoot) operating profit rose 60 per cent to S$67 million.

The group's cargo operations moved back into the black with a $S3m operating profit as freight carriage grew by 5.9 per cent. Revenue fell $S89m as cargo yield slid 10.7 per cent but expenditure fell a higher $S142m due mainly to lower fuel costs.

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