Singapore Airlines Blames Fuel Costs For 69% Plunge In Profits

SIA’s Earnings Plunged To $196 Million

On Tuesday (13 Nov), Singapore Airlines (SIA) reported a 69% drop in profits for the first half of this financial year. The carrier’s net profits between April and September stand at $196 million.

The Singapore Airlines Group, which includes Scoot and SilkAir, fared slightly better. Profits dropped 44% to $426 million.

Investors reacted quickly, with the airline’s shares dropping 1 per cent on Wednesday.

SIA chief Goh Choon Phong blamed fuel prices for the poor performance. At a briefing, he said,

Fuel price has been very volatile. Today, you saw how it has come down.

The carrier also blamed non-cash losses at Virgin Australia, which it partially owns.

Escalating fuel prices

Singapore Airlines is in the middle of an aggressive 3-year transformation plan to better compete against Middle Eastern carriers as well as low-cost airlines in the region.

But its own low-cost airline, Scoot, didn’t fare very well in the past quarter.

Between July and September, Scoot posted an operating loss of $11 million. In the same quarter last year, the airline made a $2 million profit.

Regional arm SilkAir flew more passengers but these figures weren’t enough to offset fuel prices. Like Scoot, SilkAir also posted a loss this past quarter.

Brighter days ahead

Despite the discouraging quarter, SIA is confident that blue skies are approaching. Its new non-stop routes to Los Angeles, New York and Seattle make the carrier more attractive to business travellers.

Plans to cull the long-suffering SilkAir brand will also help the Singapore Airlines Group cut costs.

And with a view to the growing luxury travel market, SIA believes that its revamped cabin products will increase its profitability in the coming years.

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