Singapore Airlines (SIA) has posted a net loss of S$159 million ($114.5 million) during its fiscal second quarter mainly due to higher fuel prices.
This is a S$482.8 million drop from the net profit of S$323.8 million that the Star Alliance member reported a year before.
While the results are an improvement from the net loss of S$307 million that SIA reported in its fiscal first quarter, the carrier remains on track to report its first full-year loss as earlier forecast.
Revenues fell by 30% to S$3.08 billion in the three months to 30 September, and expenditure was 21.3% lower at S$3.26 billion, says SIA. It posted an operating loss of S$181.4 million, versus an operating profit of S$231.7 million a year before.
"Fuel costs ex-hedging for the second quarter at S$942 million was S$202 million higher than the previous quarter, while losses from fuel hedging fell S$87 million to S$200 million," says the group.
For the first six months of the fiscal year, Singapore Airlines itself had an operating loss of S$428 million, compared to a profit of S$495 million a year before. Regional subsidiary Silkair lost S$5 million, SIA Cargo lost S$193 million and maintenance arm SIA Engineering posted a profit of S$47 million.
Group RPKs for the six months fell by 15.6% while capacity, as measured by ASKs, were 13.1% lower. As a result, the passenger load factor was 2.3 percentage points lower at 75.6%.
The group says that it has adjusted flight capacity to match lower demand, and has withdrawn and suspended several services in the reporting quarter. "Advance bookings indicate that demand for air travel has stopped declining and is gradually recovering," it adds.
Yields have fallen due to promotional pricing on flights across SIA's network, with the carrier adding: "The market conditions allow for some rollback of promotional pricing but yields are unlikely to get back to pre-crisis levels within the next six months."
Fuel hedges for the October-March half of the group's fiscal year have been contracted for 3.5 million barrels, at an average of $100 per barrel. "If the recent rise in price of fuel does not retreat, hedging losses will be reduced, but conversely operating cost will be higher," says SIA.
Source: Air Transport Intelligence news
