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Singapore Airlines reports 36% decline in Q2 profit

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Singapore Airlines reports 36% decline in Q2 profit
Singapore Airlines (SIA)’s fiscal second quarter net profit fell 36.2 percent from the previous year and the outlook remained weak as a global economic slump escalates, AFP quoted the city-state’s flag-carrier as saying.

The airline earned 324 million Singapore dollars ($218 million) in the three months to September, down from $508 million.

Revenue came in at $4.38 billion, up 9.4 percent from the same quarter last year, but expenditure surged 20.3 percent to $4.15 billion led by higher fuel costs, SIA said in a statement.

The airline said it spent $1.92 billion on fuel during the quarter, or 46 percent of total expenditure.

"The financial turmoil around the world and weak consumer confidence are impacting demand for air transportation," it said.

"Although advance bookings for the immediate next quarter are holding up reasonably well, there are signs of weakness beyond that. Fuel prices have retreated but fuel remains the biggest single item of operating expenditure."

SIA said the "recent volatility in currency markets presents another challenge."

As fuel and aircraft-related payments are made in US dollars, the sharp appreciation of the greenback and the concurrent depreciation of the euro, British pound and the Australian dollar has affected the company, it said.

"In such an environment, the company's sound finances and low level of debt put it in a position of strength. Management will monitor business trends closely and respond appropriately," SIA added.

SIA said it took delivery of three Airbus A380-800s and four Boeing B777-300ERs during the fiscal first half. As of September 30 it had a fleet of 101 aircraft with an average age of six years and three months.

Due to weaker demand, SIA said it suspended services to Osaka via Bangkok from May 2008 and Los Angeles via Taipei from October. From February next year, the airline will suspend services to Amritsar in India.

Analysts have said the aviation industry will be hit hard by the global economic downturn as people cut back on travel.

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