Tough market hits Singapore Airlines profit
Singapore Airlines group has reported a 5% dip in profits as competition remained tough and losses mounted at Tiger Airways.
Operating profit for the year ending March 31 fell to S$359.5 million (A$308m), with fourth quarter profit tumbling 60% to $27m (A$23m).
Over the 12 month period, the airline itself reported an operating performance improvement of 37% to S$256m helped by a S$93m rise in revenue which outpaced a $24m expenditure increase.
"Passenger revenue improved over the last year on the back of growth in passenger carriage, albeit at lower yields due to promotional activities amid intense competition and the weakening of major revenue generating currencies," the airline said.
Passenger numbers climbed 2.3% to 18.6m while revenue passenger kilometres rose 1.4%. With capacity climbing 1.9%, loads fell 0.4 points to 78.9%.
Despite a higher operating profit, Singapore said it was also hit partially by a “weaker share of results from associated companies”.
Those weaker results arose primarily from losses at Tiger Airways of $118m, an increase of $109m.
SilkAir’s operating profit fell S$62m as passenger growth failed to keep pace with capacity increases designed to develop new markets.
“The operating environment for the group continues to be challenging with intense competition in many areas and economic uncertainty in key markets,” the carrier said.
While passenger bookings in the first quarter of the new financial year are expected to match capacity increases, yield will remain under pressure amid promotional support to stimulate the market.
Other airlines are also offering “aggressive fares while increasing capacity”, Singapore said.
Fuel is expected to remain high putting further pressure on the company.
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