SINGAPORE: National carrier Singapore Airlines (SIA) reported on Thursday (Jul 26) that group net profit fell by nearly 59 per cent in the first quarter, throwing a snag in its major turnaround plan to stem losses.
SIA has reported year-on-year profit growth for three out of four quarters since it announced its three-year transformation plan in May last year.
AdvertisementA steep rise in oil prices and a lack of one-off items, however, dragged its net profit in the fiscal first quarter this year down to S$139.6 million, versus a revised S$337.9 million in the previous year.
“Good progress was achieved in the first year of the SIA Group’s three-year transformation programme,” SIA said in a stock exchange filing after market close.
“The Group will continue to focus its efforts on initiatives to grow revenue, enhance customer experience and improve operational efficiency,” it added.
Group revenue came in at S$3.84 billion, down 0.5 per cent from S$3.86 billion the previous year.
AdvertisementAdvertisementDuring the quarter, fuel costs increased by S$154 million, due to a 39.3 per cent rise in the average jet fuel price.
The group said in its outlook that it expects costs to remain under pressure, especially from higher fuel prices.
Passenger traffic is expected to grow in the coming months, although competition in key operating markets persists.
Cargo demand in the near term is steady, although any escalation of global trade tensions could potentially have a longer-term impact.
SIA Group, like Hong Kong-based rival Cathay Pacific Airways, announced a three-year transformation programme in May last year, designed to cut costs and boost revenue amid competition from Chinese and Middle Eastern rivals and low-cost carriers.
The announcement came after a surprise net loss of S$138 million in the fourth quarter ended March 2017 — its first loss in five years.
As part of the transformation plan, SIA will absorb underperforming SilkAir into the parent brand after 2020, in a move that will better align the brands for travellers from long-haul destinations such as Europe and North America using Singapore as a connecting hub.
SIA will resume the world’s longest commercial flights to New York on Oct 11 after a five-year hiatus, helping to close a gap in its US capacity relative to competitors like Cathay Pacific Airways and Emirates.
It will also launch non-stop flights between Singapore and Los Angeles on Nov 2 this year.
Earlier this month, the group was named the world’s best airline in Skytrax’s 2018 World Airline Awards, retaking the position it last held in 2008.
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