Mayday, mayday: Singapore’s airlines still in the red

As competition intensifies and yields remain depressed.

The unrest in Thailand and the two aircraft incidents further slowed air travel, as fewer Chinese passengers travelled to Southeast Asian countries.

According to a report by OCBC, airlines continued to face intense competition and as a result of overcapacity, yields remained depressed, affecting profitability.

Singapore Airlines’ recent profits plunged 56% YoY, mainly dragged down by lower yields, loss making subsidiaries, SIA Cargo and Scoot, as well as from its associate, Tiger Airways Singapore.

For Tigerair , it went through an extremely rough year as it divested stakes in loss-making overseas ventures, while charging record high provisions, which led to a ~14x YoY increase in its 9MCY14 net losses.

Meanwhile, the aviation service providers, SIA Engineering and SATS Ltd, also saw a lackluster 2014. Their revenue growth is positively correlated to air traffic growth and the drop in air travel demand resulted in muted performances throughout the year. SATS’ 9MCY14 PATMI declined 6% YoY on weaker performance from subsidiaries, the weakening Japanese Yen and increasing labour costs. SIAEC fared worse as 9MCY14 PATMI dropped 22.9% YoY due to fewer aircraft checks.

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