SIA posts surprise Q4 loss, sees no quick recovery
UPDATED @ 08:38:27 PM 09-05-2012
SINGAPORE, May 9 – Singapore Airlines Ltd (SIA) swung to an unexpected fourth-quarter loss, battered by weak demand and high jet fuel prices, putting further pressure on Chief Executive Goh Choon Phong to turn around the airline.
SIA, the world’s second-largest carrier with a market value of US$10 billion (RM30.74 billion), warned that passenger yields would remain weak.
“Competition amongst airlines is expected to place downward pressure on passenger yields, especially in Europe and the United States where demand continues to be impacted by the anaemic economic outlook,” it said in a statement today.
SIA reported a net loss of S$38.2 million (RM93.69 million) in January-March versus a net profit of S$171 million a year ago. Seven analysts surveyed had expected the Singapore flag carrier to report a profit of S$93 .5 million.
The airline, 56 per cent owned by Singapore sovereign investor Temasek Holdings, has missed analysts forecasts for the previous four consecutive quarters. It holds a media and analysts conference tomorrow.
SIA’s CEO Goh, who took charge in January 2011, has been forging alliances with other carriers around the world to help bring in more traffic for the carrier, particularly between Australia and Europe.
However, global airline passenger growth has slowed after a strong rebound in 2010 as concerns about the European sovereign debt problem kicked in, while jet fuel prices surged sharply, squeezing airlines’ margins.
This year, SIA asked its pilots to volunteer for a no-pay-leave of up to two years to cut costs and slash its cargo capacity by 20 per cent due to persistent weakness in demand.
SIA’s full-year profit plunged 69 per cent to S$335.9 million from S$1.1 billion a year ago. Full-year operating margins dwindled to 1.9 per cent from 8.8 per cent.
The carrier last reported a net loss in July-September 2009.
“The recovery of air freight demand will be gradual, possibly only in the second half of the year. Cargo yields are likely to remain stagnant for the next quarter,” SIA said.
The carrier said the loss from the disposal of the last Boeing 747-400 aircraft also contributed to the quarterly loss. SIA was once the largest operator of the Boeing’s jumbo jet, but it has switched to Airbus A380.
Today, Cathay Pacific Airways Ltd, Asia’s No.4 carrier by market value, said high fuel prices and an uncertain global economy are forcing the Hong Kong-based airline to cut costs.
SIA’s shares have risen 4 per cent so far this year, underperforming the 10 per cent gain in the broader market.
The carrier has also been facing competition from its traditional rivals in Asia Pacific such as Cathay Pacific and Qantas Airways Ltd as well as the rise of the second tier carrier such as Garuda Indonesia Tbk. – Reuters