Singapore Airlines Group (SIA) has posted a significant drop in full-year profits.
The airline group reported net income of SG$336 million (US$268 million) for the financial year 2011-12 – down 69% from the SG$1.09 billion profits it achieved the previous year.
Like many other airlines, SIA achieved a rise in full-year revenues (+2% to SG$14.86 billion), driven by a 4% rise in passenger traffic, but rising fuel costs hit the company’s bottom line. SIA revealed that its jet fuel bill had jumped 29% year-on-year, contributing to an overall 10% rise in group expenditure.
The group’s mainline carrier, Singapore Airlines was the most severely hit, with operating profits slumping from US$851 million in 2010-11 to just SG$181 million last year – a drop of almost 79%. Regional carrier SilkAir also saw a drop in operating profits, falling 13% to SG$105 million. The group’s cargo and engineering units also saw worsening results.
Commenting on its prospects for the 2012-13 financial year, SIA said that an “anaemic” economic outlook is likely to “place downward pressure on passenger yields, especially in Europe and the United States”. It added that high fuel prices are also likely to “adversely impact the group’s operating performance”.
“The group will stay committed to maximising operating efficiency to ensure containment of costs. With a strong balance sheet, the group is well positioned to meet the challenges ahead,” the SIA statement added.
In the year to March 2013, SIA expects to take delivery of three more Airbus A380s and one A330-300, while three B777s will be decommissioned. Two B777s will also return to the airline’s fleet following the expiry of their lease to Royal Brunei Airlines. This will bring the company’s operating fleet to a total of 102 aircraft by March 2013.
The company’s capacity is expected to increase 3% for the full year, although the airline said that it would “continue to monitor the patterns of demand, seeking out growth opportunities and reviewing unprofitable routings”.