SINGAPORE Airlines (SIA) put on a poor showing for the first quarter of financial year 2014/2015, reporting a 71 per cent year-on-year depression in net profit on the back of intensified competition, "unforeseen events" and the performance of associated companies.
In a statement released to the press yesterday, the SIA umbrella group reported an operating profit of S$39 million (US$31.3 million), a 52.4 per cent drop over the same period last year.
Discounting non-operating and exceptional items costs, SIA's profit plunged further to S$35 million, or 71.3 per cent less than the first quarter of the previous financial year.
The airline cited the continued “weak revenue environment” as a factor, compounded by the results from associated and joint venture companies, which contributed S$16 million in losses from last year. Out of this, S$14 million was attributed to Tiger Airways Holdings.
Tiger Airways Holdings shut down its Indonesian offshoot Tigerair Mandala – in which it held a 33 per cent stake – to no one’s surprise after persistently poor results (TTG Asia e-Daily, June 19, 2014).
SIA’s press release did not identify the “unforeseen events” depressing travel demand, though the mysterious disappearance of Malaysia Airlines’ (MAS) MH370 and Thailand’s tourism-crushing military coup would understandably have shaken traveller confidence.
The Singapore flag carrier said: “The outlook for the air transportation industry has become more challenging with the continuing uncertain global economic climate, geopolitical concerns in the region and elevated fuel prices.
“Load factors in the current quarter are expected to be stable year-on-year. Aggressive fares and capacity injections from competitors will continue to place pressure on yields.”
Events of the recent past promise no relief for the industry with the gunning down of MH17 that dealt a second blow to the ailing MAS, and the crashing of TransAsia Airways and Air Algerie, all mere days apart.