SINGAPORE: Singapore Airlines Ltd reported an 81 percent plunge in second-quarter earnings, hurt by higher fuel prices, lower airfares and non-cash losses at its part-owned Virgin Australia Holdings Ltd.
The airline said bookings in the coming months were expected to be stronger year-on-year.
“However, headwinds continue to persist in the form of cost pressures arising from significantly elevated fuel prices compared to a year ago, as well as keen competition in key operating markets,” Singapore Airlines said in a statement.
The carrier, a benchmark for Asia’s premium airline industry, posted a net profit of S$56 million ($40.5 million) for the quarter ended Sept. 30, down from S$293 million a year earlier. The prior-year figure was restated due to accounting changes.
Excluding the S$116 million loss relating to its 20 percent stake in Virgin Australia, the company reported an adjusted net profit of S$172 million, down 41 percent from a year earlier.
Group revenue rose 5.4 percent to S$4.06 billion during the quarter as the airline added capacity and filled a higher proportion of seats.
However, yields, a proxy for ticket prices, fell 2.2 percent in the second quarter compared with a year earlier, failing to help offset the impact of a 24 percent rise in fuel prices.
That yield decline was less steep than a first-quarter decrease of 3.2 percent but bucks a broader global industry trend toward rising fares, including at regional rivals like Hong Kong’s Cathay Pacific Airways Ltd and Australia’s Qantas Airways Ltd.
Singapore Airlines is in the second year of a three-year transformation plan designed to cut costs and boost revenue. It plans to merge regional arm SilkAir into its main brand after 2020.
Its low-cost carrier Scoot, which raised fares by around 5 percent from Sept. 1 in reaction to higher oil prices, swung to an S$11 million operating loss during the second quarter from a S$2 million profit a year earlier as fuel and expansion costs outpaced revenue growth.
Singapore Airlines’ management team will hold a detailed briefing for investors and media on Wednesday.
The airline’s shares, which fell 1.8 percent on Tuesday, have fallen by 11.7 percent since January.