It blamed a 40% increase in jet fuel costs and share losses from Virgin Australia.
Singapore Airlines (SIA) was struck by high fuel prices as profits dropped 80.9% in Q2 FY18/19 to $56.4m from $293.3m in Q2 2018, an announcement revealed. Its revenue however rose 4.2% to $4.06b from $3.85b.
SIA primarily attributed the decrease to the 40%, or $226m, increase in jet fuel costs. The airline also highlighted how an increase in share of losses amounting to $97m of its associated companies for the period, mostly due to Virgin Australia (VAH), impacted its profits.
The flagship carrier also took a hit in Q1 with profits dropping 58.67% to $139m from $337.9m due to fuel price hikes, whilst revenue dipped 0.5% to $3.84b.
Non-fuel expenditure for the Q2 jumped 4.4% in tandem with the group’s 5.3% capacity growth, and excluding the impact of the one-off item of $116m in relation to VAH over the quarter, adjusted net profit would have come in at $172m, the group added.
The group’s operating profits for H1 of FY18/19 declined 44.1% to $426m from $762m in the previous year, with the group’s expenditure growing 7.6% to $7.48b led by the increase in net fuel costs, its financial statement noted.
Broken down to its main companies, the parent airline company reported a 4.2% gain in revenue on the back of 6.5% passenger carriage growth in Q2, however this was offset by $167m fuel costs and other expenditures, according to the group.
SilkAir and Scoot reported operating losses in Q2 as the increase in fuel and expansion costs outpaced its passenger revenue growth at 2.1% and 23.4%, respectively. SilkAir saw its passenger traffic increase 6%. However the statement cited how it was insufficient in mitigating net fuel cost, amongst other increases.
For Scoot, the 21.5% increase in carriage was also overshadowed by higher fuel and other costs, the firm added.
Meanwhile, revenue contribution from engineering services fell 7.9% on lower airframe and fleet management activities, the group noted. Including other miscellaneous changes in revenue, overall group revenue inched up 2.5% to $7.91b.
Flown revenue for the group rose by $422m thanks to a 5.8% increase in passenger flown and 7.4% growth in cargo flown revenue, its financial statement revealed.
“Passenger flown revenue was lifted by an 8.8% increase in traffic, outpacing growth in capacity of 5.4%, driving passenger load factor for the group airlines in aggregate to rise 2.6% points to 83.6%,” the group said.
Whilst headwinds will persist following cost pressures as a result of elevated fuel prices and global trade tensions, the group said that they remain cautiously positive on its business outlook with bookings expected to be stronger year-on-year.
“The SIA group remains committed to its three-year transformation programme to enhance customer experience, grow revenue and improve operational efficiency,” the firm said. “The group has also been significantly enhancing its digital capabilities through a multi-phased programme … that encompasses company-wide training programmes and participation by staff in innovation projects.”
The group introduced its new non-stop services to Los Angeles and New York in a bid to provide customers with more convenient travel options and strengthen the airline’s competitiveness as well as Singapore’s as a hub for international travel.
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