Singapore Airlines’ profit plunges 53% in Q4
Feb. 2, 2012, Singapore - Singapore Airlines Ltd. said Thursday that quarterly profit plunged 53 per cent as passenger demand slowed while higher fuel prices sent costs up.
Net profit in the fourth quarter was 135 million Singapore dollars ($108 million) compared with SG$288 million a year earlier, the carrier said in a statement.
The airline, known as SIA, warned a slowing global economy and high oil prices could continue to undermine profits this year.
"Forward bookings continue to show signs of weakness in the final quarter of the financial year, due to uncertainty in the global economy and the protracted Eurozone debt crisis," the company said.
Quarterly revenue at the world's second-biggest airline by market capitalization rose 1 per cent to SG$3.9 billion from a year earlier while expenditure increased 12 per cent to SG$3.7 billion.
Spending on fuel grew by $375 million, or 33 per cent, as jet fuel prices increased 30 per cent from a year earlier. Fuel accounted for 40 per cent of the group's expenditure, the airline said.
Singapore Airlines shares fell about 50 per cent last year. But analysts give the company credit for investing in new planes, refurbishing older ones, and focusing on enhancing its most profitable seats in business and first class.
SIA also plans to start its own long-haul budget airline, Scoot, by the middle of this year, a move analysts say should help the group — which includes a cargo fleet, regional carrier SilkAir, and a 33 per cent stake in short-haul budget Tiger Airways — weather a likely further slowdown in global travel demand this year.
Global airline profits are expected to fall to $3.5 billion this year from about $6.9 billion in 2011, the International Air Transport Association said in December.
"Their main product is gradually being pushed to becoming more and more premium and they're launching a low-end product as well," said Raymond Yap, who covers SIA for brokerage CIMB Securities in Kuala Lumpur. "The middle is where you don't want to be."