Singapore Airlines full-year net profit down 69%

photo_1336568157836-1-2-Quicklook.jpgA Singapore Airlines Boeing 747 at the Singapore Airshow in February
AFP/File – Roslan Rahman

Singapore Airlines’ full-year profit slumped 69 percent year-on-year after a fourth-quarter loss due to high oil prices and global economic uncertainty, the leading Asian carrier said Wednesday.

Net profit for the year to March plunged to Sg$336 million ($268 million) on group revenues of Sg$14.86 billion, the carrier reported in a statement.

In the fourth quarter, the airline said it suffered a net loss of Sg$38.2 million, down from a profit of Sg$171 million in the same period a year ago.

It was the third quarterly loss in the history of the company, which is also facing stiff competition from other premium carriers from the oil-rich Middle East as well as from the growing ranks of budget carriers.

“Fuel prices are expected to remain at high levels, which will adversely impact the group’s operating performance,” the airline said.

Jet fuel prices rose 32 percent year-on-year. About 40 percent of SIA’s revenue for the financial year was spent on fuel, it said.

SIA was also hampered by its exposure to European and US markets, where travellers are cutting back due to economic headwinds from the eurozone debt crisis as well as persistent worries over America’s economic recovery.

Brendan Sobie, a Singapore-based analyst with the consultancy Centre for Aviation, said SIA was not alone as it grappled with challenges before the aviation industry.

photo_1336568361770-1-2-Quicklook.jpgThe airline said some 40 percent of its revenue for the financial year was spent on fuel
AFP – Roslan Rahman

“The market is very challenging right now and really has been for some time. It came out of the downturn that we saw in 2009 but it’s been pretty challenging for several years really,” he told AFP.

Other regional airlines were also struggling, he said, noting that Hong Kong flag carrier Cathay Pacific had just put out a profit warning, saying it expects “disappointing” 2012 first half results.

SIA’s new budget long-haul budget offshoot Scoot — which will embark on its maiden flight in June — will likely offer little financial relief, Sobie said.

“In this new fiscal year you have all the start up costs for Scoot and you have what at least initially will be a small operation,” he said.

While it remained in the black for the full year, SIA faces formidable challenges due to continued high oil prices and slackening travel demand in Europe and the US.

SIA suffered its first ever quarterly loss in the three months to June 2003 after a health scare caused by the flu-like Severe Acute Respiratory Syndrome (SARS) sent global travel demand reeling.

The carrier’s second quarterly loss came six years later in June 2009 when demand was hit by a global financial crisis that followed the collapse of US bank Lehman Brothers.

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