Singapore Air runs into first quarterly loss in 5 years
Fine, lower yields and higher oil prices spell turbulence
MAYUKO TANI, Nikkei staff writer
SINGAPORE -- Singapore Airlines booked a net loss of 138.3 million Singapore dollars ($99.3 million) for the three months ended in March, the first quarterly red ink since the same period in 2012, weighed down by depressed ticket prices and higher fuel costs.
For the full fiscal year ended the same month, net profit plunged 55% to S$360.4 million.
Another reason for the disappointing results was a loss provision of S$132 million set aside for a 74.8 million euro ($83.2 million) fine imposed by the European Commission. The commission in March fined 11 airline companies including Singapore Airlines for colluding to fix cargo prices more than a decade ago.
In order to get back on a growth path amid the tough environment, the flag carrier announced in a press release a comprehensive review of its business. The company formed a "transformation office" to scrutinize practices having to do with its network, fleet, products and services, as well as organizational structure. "The review is aimed at identifying new revenue generation opportunities," the company said.
For the March quarter, revenue was flat from a year earlier at S$3.72 billion. Passenger traffic was strong across the board, but passenger yields, a measure of the airline's revenue for flying one passenger 1km, were squeezed further as price competition continued. Because of a more than 50% jump in the average price of fuel, fuel costs increased 5%, pushing up total expenditures by 4%.
For the full year, revenue dropped 2.4% to S$14.86 billion. Expenditures dipped 2.1% to S$14.24 billion thanks to lower fuel prices.
"Intense competition arising from excess capacity in major markets, alongside geopolitical and economic uncertainty, continue to exert pressure on yields," the company said in a statement.