SIA’s Earnings Plunged To $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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