Singapore Airlines suffers under competition pressure

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Singapore Airlines has seen increased competition
Singapore Airlines has seen increased competition

Singapore Airlines (SIA) has seen its operating profit and revenues drop in its first quarter results following increased competition and depressed travel demand in some Asian markets.

The group’s operating profit for the first quarter of its 2014/15 year came in at SG$39 million (US$31m), 52.4% lower than the same period last year.

After exceptional items its net profit stayed in profit at SG$35m but this is significantly lower than the SG$87m seen in the same period last year.

The group’s revenue fell SG$158m (or 4.1%) to SG$3.68 billion while expenditure was cut 3.1% to SG$3.65bn.

While the airline is competing more against Gulf and Asian carriers and some Asian markets have dampened, the airline’s joint venture companies saw a SG$27m loss while Tiger Airways posted a SG$14m loss.

SIA’s statement today read: “The outlook for the air transportation industry has become more challenging with continuing uncertain global economic climate, geo-political 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.”

SIA’s performance dropped 49.4% while SilkAir’s profit declined 85.6%. The load factor for both carriers remained relatively flat at 77.7% and 69.5% respectively.

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