SIA pinned down by competition

23 May 2017  2051 | Business & Trade Fairs

SINGAPORE Singapore Airlines reported, last week, a net loss in the fourth quarter, causing full-year profit to drop by more than half as intense competition continued to buffet the carrier.

SIA has been battling strong competition from Asian low-cost carriers and Middle Eastern airlines, which now boast modern fleets and top-quality inflight services.

It said in a statement that a “wide-ranging review” of the company’s network, fleet, products, services, organisational structure, and processes is underway to better position the airline for the future.

                                               

The carrier said it suffered a net loss of SGD138.3 million (USD99.4 million) in the fourth quarter to March as operating profit tumbled and the airline made a provision for its cargo business.

For the full-year, net profit came in at SGD360 million, down 55.2% from the previous year, with annual revenue easing 2.4% to SGD14.87 billion.

“Intense competition arising from excess capacity in major markets, alongside geopolitical and economic uncertainty, continue to exert pressure on yields,” the company said.

A rebound in jet fuel prices from last year also eroded earnings as the average price for Singapore Jet fuel climbed from its low of USD37.9 a barrel in January 2016 to SGD61.9 in March this year, the carrier said.

“The signs were already there that they might register a net loss in the fourth quarter,” said aviation analyst Shukor Yusof of Endau Analytics, noting that profits in the previous quarters had been on the decline.

“The size of the loss is quite staggering for the three months and it would indicate that SIA would need to do something drastic and radical to overcome its difficulties in the coming years,” he told AFP.

Noting that SIA’s budget carriers, Tiger Air and Scoot, had done better than their parent airline, Shukor said this indicates “that the growth for the SIA Group is pretty much now in the low-cost segment of the business”.

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