Singapore Air Posts Q4 Loss, No Quick Fix

 

Singapore Air Posts Q4 Loss, No Quick Fix Singapore Airlines 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 USD$10 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 on Wednesday.

SIA reported a net loss of SGD$38.2 million in January-March versus a net profit of SGD$171 million a year ago.

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 reduce its cargo capacity by 20 percent due to persistent weakness in demand.

ANNUAL PROFIT FALLS 69 PCT

SIA’s full-year profit dropped 69 percent to SGD$335.9 million from USD$1.1 billion a year ago. Full-year operating margins dwindled to 1.9 percent from 8.8 percent.

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 Boeing’s jumbo jet, but it has switched to the Airbus A380.

On Wednesday, Cathay Pacific, Asia’s No.4 carrier by market value, said high fuel prices and an uncertain global economy are forcing it to cut costs.

SIA’s shares have risen 4 percent so far this year, under-performing the 10 percent gain in the broader market.

The carrier has also been facing competition from its traditional rivals in Asia Pacific such as Cathay and Qantas as well as the rise of second tier carriers such as Garuda Indonesia.

(Reuters)



Privacy policyContact us | Advertise with us