SINGAPORE, Nov 10 - Singapore Airlines, the world’s biggest carrier by market value, reported a worse-than-expected quarterly loss as the global economic slowdown hit margins, but the airline said the outlook has improved.
“Advance bookings indicate that demand for air travel has stopped declining and is gradually recovering,” SIA said in a statement.
“Market conditions allow for some rollback of promotional pricing but yields are unlikely to get back to pre-crisis levels within the next six months,” it added.
SIA has seen falling passenger and cargo demand this year as a global recession hurt business and leisure travel, forcing it to reduce capacity by 11 per cent in the 12 months from April. The airline also cut staff salaries and working hours.
Analysts said the growing presence of budget airlines in the region is making life tougher for premium carriers like Singapore Airlines and Japan Airlines.
Malaysia’s AirAsia and Australia’s JetStar are on an aggressive expansion drive despite the downturn and have begun to offer long-haul flights in addition to shorter routes.
JAL, Asia’s largest carrier by revenues, is undergoing a drastic restructuring and negotiating for further government support after racking up billions of dollars in losses.
SIA, which warned it July it could post a full-year loss if tough conditions persist, reported a net loss of S$159 million (RM389.6 million) compared to a net profit of S$324 million a year ago.
But the fiscal second quarter loss was narrower than the S$307 million recorded in the previous three-month period.
Five analysts polled by Reuters had estimated a net loss of S$38 million loss on average.
The carrier, 55 per cent owned by state investor Temasek Holdings, has also delayed deliveries for eight airplanes from Airbus by 6-12 months.
Despite its full-year profit warning, analysts polled by Thomson Reuters forecast SIA will book a net profit of S$183.6 million in the current financial year, down from S$1.06 billion in the previous year.
That would be its smallest full-year profit since at least 1988, according to Thomson Reuters data.
Ng Kian Teck, an analyst with SIAS Research, said before the results the outlook for SIA has improved in recent months, helped by an economic recovery in Asia and prospects of a rise in the number of visitors to the city-state.
Visitor arrivals to Singapore registered its first year-on-year growth in September, rising 7.1 per cent from the same period last year after declining for 15 consecutive months.
“Tourism into Singapore should improve with the launch of the two IRs (casinos) but oil prices will remain a threat,” he said.
SIA’s capacity cut resulted in an improvement in its overall load factor but yields, or the amount of revenue per passenger, remain under pressure as it cuts prices to attract flyers.
Korean Air Co, the world’s biggest air cargo carrier, earlier today posted a second straight quarterly net profit, helped by lower fuel costs. July-September net profit rebounded to 264 billion won (RM768.4 million) from a 684.1 billion won loss a year ago, but was just below forecasts.
SIA’s share price has gained 26 per cent since the start of the year, half the 53 per cent rise in the broader market.
The stock closed up 0.14 per cent today ahead of the results, underperforming the 0.53 per cent rise in the index ? Reuters
Show/Hide comments
Show/Hide comment form
