Singapore Airlines: Swings into Loss; Shares Slump

Paterniano Del Favero
Mag 20, 2017

The airfreight market has since seen structural change, however, and SIA Cargo's freighter fleet has been "right-sized" in recent years to the current seven aircraft while the proportion of revenue from passenger aircraft belly hold capacity has increased significantly.

"There will be no change to SIA Cargo's operations", the airline said.

SIA said the re-integration will help improve efficiency, and is expected to be completed in the first half of 2018, after which SIA Cargo will become the airline's cargo division.

The airline has also announced today that its SIA Cargo subsidiary will be reintegrated into the main airline.

Singapore Airlines (SIA) announced a major business transformation of the national carrier on Friday (May 19), after reporting an unexpected fourth-quarter net loss of S$138 million.

While there will be no job cuts, some jobs could end up being redesigned as part of the restructuring, he said at a results briefing on Friday, in response to queries from the media. The planes are on lease and will be 10-years old by the time they leave Singapore Airlines' fleet.

With profits slipping in the last few years because of intense competition from other long-haul premium carriers such as Emirates and Qatar Airways, as well as high fuel costs, SIA has taken steps to broaden its portfolio.

As part of efforts to adapt to this new environment, SIA established Scoot to capture a slice of the growling low-priced long-haul market, while it recently took full control of short-haul LCC Tigerair Singapore.

In addition to a S$58 million decline in operating profit for the year, the airline said the fall in net profit was largely attributable to SIA Cargo's S$132 million provision for "competition-related matters", and the need to return U$117 million to the European Commission after it re-imposed a cartel fine.

A year ago, the split was about 80/20.

SIA also reported a net loss of S$138 million in its fourth quarter January-March 2017 compared to a S$225 million net profit in the same period past year.

Mr Brendan Sobie, analyst at think-tank Centre for Aviation, said the short-term outlook for SIA is rather bleak. "What we saw in the January to March quarter marks the beginning of a new cycle", he said.

But he added: "While management has set in place several initiatives that have yielded positive results, as evident by the group's improving passenger load factor, we remain cautious over the industry overcapacity situation, that will likely continue to have a negative impact on the group's yield and profitability".

Altre relazioni OverNewsmagazine

Discuti questo articolo