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Indiaexportnews.com

Singapore Airlines suffers 30pc profit loss

  08.11.2012    

Singapore Airlines (SIA) posted a 30 per cent drop in net profit S$168 million (US$136.6 million) year on year in the first half of its 2012-13 financial year, and blamed losses on SIA Cargo which lost S$99 million widening its S$31 million loss made last year, according to the Shipping Gazette. 
Yet the group enjoyed an operating profit increase of six per cent to S$8 million year on year, a gain that was partly offset by a weaker second quarter air freight demand, widening of cargo losses attributed to weaker demand.
The carrier said that despite reducing freighter capacity 2.5 per cent, cargo load factor fell 1.5 percentage points to 62.7 per cent, as cargo carriage declined at a higher rate of 4.7 per cent in tonne kilometres.
"The continuing European economic crisis is dampening global business confidence, exerting downward pressure on loads and yields. These challenging market conditions are exacerbated by high and volatile jet fuel prices," said a company statement.
"The group remains vigilant in ensuring efficient deployment of its fleet in response to changes in demand patterns. A strict cost management regime is also in place to mitigate cost pressures."
The carrier, the world's third biggest, said it had to cope with lower volumes while facing increasing competition from Middle Eastern airlines and must now mothball one of this one of its thirteen 747 freighters to cut capacity.
"The economy will continue to be very challenging, or perhaps even more challenging.We don't see any reprieve in terms of improvement, especially from economies such as Europe," CEO Goh Choon Phong told a press conference.
The carrier is considering selling freighters "if there's a good enough offer" he said. It's also looking at ways to shed passenger planes, he said without elaboration.
Operating losses at the cargo unit jumped to S$50 million in the quarter ending in September, according to Bloomberg calculations. Earnings at the main airline unit fell 5.6 per cent to S$84 million. The engineering division's operating profit fell 5.9 per cent to S$32 million, while regional carrier SilkAir boosted its figure 46 per cent to S$19 million.
Said Deutsche Bank AG analyst Joe Liew: "We are not convinced that we will see a material earnings pickup over coming months. We continue to see no reason to own the stock."
Said SIA Cargo chairman: "We will have to ride out the current challenges that we are facing. When the economy picks up we will start to see the cargo business coming back."


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