Singapore Airlines 3Q net profit down 53 percent on-year
Singapore Airlines said Thursday its third-quarter net profit tumbled 53 percent from a year ago due to the impact of "persistently high" jet fuel prices. Weak passenger and cargo demand from Europe -- grappling with a debt crisis -- also dragged profits lower. The airline, considered a bellwether for the industry, said net profit in the three months to December fell to Sg$135.2 million ($108.5 million) from Sg$288.3 million. "The persistently high jet fuel prices had adversely affected the group's performance," the airline said in a statement. Revenue rose one percent to Sg$3.88 billion, but overall expenditure climbed at a faster pace of 12 percent to Sg$3.72 billion. Fuel expenses alone increased 33 percent during the quarter. Fuel accounted for 40 percent of the company's expenditure, which was up seven percentage points from the year before, SIA said. The airline painted a bleak outlook for the fourth quarter. "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," it said. The global air cargo market will also be weak as forward-looking trade indicators show waning consumer demand in major developed countries, the airline said. "Passenger yields are expected to remain under pressure while cargo yields are expected to continue to decline," it said. "As the price of jet fuel remains high and volatile, fuel costs continue to adversely impact the group's financial performance." Brendan Sobie, a Singapore-based analyst with the consultancy Centre for Aviation, said the fall in SIA's net profit was in line with that of other carriers. "Generally, the situation with airlines is that the profitability has been going down and the outlook for this year is not very good, so it's all in line (with) that," he told AFP. "These results are not too surprising given the market situation," said Sobie, citing high fuel prices and a decline in demand from Europe and Japan as the chief reasons for SIA's lower profit. Sobie however noted that SIA's regional wing, SilkAir, had a narrower decline in its operating profit which he said reflect the continued strength of Asian economies. Unlike SIA, SilkAir operates only to destinations within Asia -- except Japan. "The only part of Asia that's been weak in the last few quarters has been Japan, where again SIA has heavy exposure," Sobie said. Japan's tourism industry was impacted by a major earthquake and tsunami that struck the country in March last year. The disasters also sparked a nuclear meltdown at a power plant, raising fears of a radiation leak. SIA's profit slump mirrors dismal performances by other regional airlines such as Japan's All Nippon Airways, which saw its net profit for the nine months to December slashed 10 percent year-on-year. Flag carrier Korean Air as well as India's largest private carrier Jet Airways recorded net losses in their full-year and quarterly earnings, respectively -- a reversal from net profits experienced a year earlier.
