Singapore Airlines swung to a net loss of S$307 million ($212 million) during its fiscal first quarter, its first quarterly loss since the SARS crisis in 2003.
The Star Alliance member also warned that it expects to report a net loss for the full year if "adverse business conditions" continue.
The net loss for the three months ended 30 June was in contrast to a S$358.6 million net profit a year before. It recorded an operating loss of S$319 million for the first quarter, against an operating profit of $343 million in 2008.
Revenues fell by 30% to S$2.87 billion as passenger and cargo yields declined. Expenditure was 15.8% lower at $3.19 billion as the company gained from falling jet fuel prices. Fuel hedging losses reached S$287 million, versus a gain of S$349 million a year before.
"The group's first quarter performance reflected the adverse business conditions for airlines. If these conditions continue, the group expects to make a loss for the full year," says SIA. "Net operating cash flow is expected to remain positive for the rest of the financial year. The group's cash balance remains strong and the company does not foresee any necessity to raise capital."
Singapore Airlines itself had an operating loss of S$271 million during the quarter, regional subsidiary Silkair lost S$3 million, and SIA Cargo lost S$104 million. Publically listed ground services subsidiary Singapore Airports Terminal Services (SATS) made S$44 million, and maintenance arm SIA Engineering reported an operating profit of S$25 million earlier this week.
SIA says that it is taking steps to contain costs. These include a freeze on hiring, implementing unpaid leave, wage cuts and a deferment of non-essential projects. It will also cut a monthly variable component of its employees' salaries due to the loss in accordance with an agreement with its unions.
Looking ahead, the airline warned that it expects its bottom line could be affected by the volatile jet fuel prices. It adds that while the air cargo market remains under pressure, the outlook "remains challenging, with yields expected to remain under pressure from excess capacity in the market".
Source: Air Transport Intelligence news
