The airlines' joint venture, NokScoot, was hit by heavy losses.
Singapore Airlines (SIA) extended its earnings decline as profits crashed 27% YoY to $284.1m in Q3 from $389.3m as heightened fuel costs and losses from its joint ventures hit quarterly earnings, according to its financial statement.
Also read: SIA Q2 profits dropped 80.9% to $56.4m in Q2
The decline was attributed to weaker operating profit which slipped by 14.5% YoY to $388m from $454m. This was due to the share of losses of the Group’s joint ventures driven by increased fuel prices and intense competition.
Although the operating profit of their parent airline company rose by $3m to $369m, the earnings of SilkAir and SIA Engineering fell to $7m and $16m respectively. Low-cost Thai airline NokScoot suffered the heaviest loss as its operating profit declined from $43m in 3Q2018 to just $1m in 3Q2019.
Net fuel cost went up by 22.2% or $227m due to a 21.1% increase in average jet fuel price, partially alleviated by a 131.6% larger hedging gain versus last year.
Revenue growth was lifted by passenger demand growth which rose by 7.7%. Passenger traffic also went 8% up, outpacing the growth in capacity. Revenue per available seat-kilometres (RASK) increased 1.3% as a result of their three-year transformation programme.
“Overall passenger bookings in the forward months are tracking capacity growth, however uncertainties surrounding US-China tariffs and their consequent effects on global trade flows, as well as Brexit, are clouding the overall demand outlook for both passenger and cargo,” SIA Group stated in a SGX filing.
“SIA will continue to be nimble and proactive in responding to pockets of weakness or opportunity by rebalancing supply across the network.”
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