Singapore Air flags earnings pressure from tough competition
Air India-Vistara merger to complete by November
Declares interim dividend of 10 SG cents per share
HY net profit down 48.5%
New paragraph 1, adds context on outlook in 2-3, company quotes in 9, analyst quote in 11 and details on Air India-Vistara merger in 12-14
By Roshan Thomas
Nov 8 (Reuters) -Singapore Airlines SIAL.SI on Friday flagged its earnings would stay under pressure despite robust travel demand in the second half of the year, while it reported a profit fall reflecting stiff market competition coupled with rising costs.
The city-state's flag carrier said the aviation sector was struggling with macro-economic uncertainty, rising geo-political tensions, inflationary cost pressures and increased competition.
"The Group will remain nimble and agile, adjusting its passenger network and capacity to match evolving demand patterns," the airline said while signalling a healthy air freight demand heading into the year-end peak.
Singapore Airlines Group includes the flag carrier and budget airline Scoot.
Singapore's leading airline operator posted a 48.5% plunge in net profit to S$742 million ($561.65 million) for the April-September period and declared an interim dividend of 10 Singapore cents per share. The group reported net profit of S$1.44 billion a year ago.
SIA's total expenses rose to S$8.70 billion for the half-year ended Sept. 30, a 14.4% rise, due to a jump in both fuel and non-fuel costs, while its passenger yield, a proxy for air fares, fell 5.6% in the first half.
Revenue rose by 3.7% from a year ago to S$9.50 billion.
Passenger load factor — a measure of how many seats are filled on planes — was 86.4% in the first half for the group as a whole, compared with 88.8% a year earlier.
"Increased capacity and stronger competition in key markets led to yield moderation, resulting in lower operating profit," Singapore Airlines said.
Airlines globally have ramped up the number of flights and routes to cater to robust air travel demand, which has resulted in increased competition, putting pressure on ticket prices and squeezing profit margins.
Analysts at Morningstar have flagged in a note that the rise in international capacity by global airlines had begun to be reflected in increasing competition.
AIR INDIA-VISTARA MERGER PROGRESS
Singapore Airlines said it will record a non-cash accounting gain of S$1.1 billion once the Air India-Vistara merger completes, which the firm expects by November.
Singapore's flagship carrier announced a plan to merge the decade-old Vistara and Tata-owned Air India in November 2022, in a bid to create a dominant full-service airline in the domestic and international markets.
Singapore Airlines (SIA), which is set to get a 25.1% stake in Air India, will inject S$498 million into the new combined entity, through subscription of new Air India shares.
($1 = 1.3211 Singapore dollars)
Reporting by Roshan Thomas and Aaditya Govind Rao in Bengaluru; Editing by Janane Venkatraman and David Evans
Berita Terkini
Penafian: Entiti XM Group menyediakan perkhidmatan pelaksanaan sahaja dan akses ke Kemudahan Dagangan Atas Talian, yang membolehkan sesorang melihat dan/atau menggunakan kandungan yang ada di dalam atau melalui laman web, tidak bertujuan untuk mengubah atau memperluas, juga tidak mengubah atau mengembangkannya. Akses dan penggunaan tersebut tertakluk kepada: (i) Terma dan Syarat; (ii) Amaran Risiko; dan Penafian Penuh. Oleh itu, kandungan sedemikian disediakan tidak lebih dari sekadar maklumat umum. Terutamanya, perlu diketahui bahawa kandungan Kemudahan Dagangan Atas Talian bukan permintaan, atau tawaran untuk melakukan transaksi dalam pasaran kewangan. Berdagang dalam mana-mana pasaran kewangan melibatkan tahap risiko yang besar terhadap modal anda.
Semua bahan yang diterbitkan di Kemudahan Dagangan Atas Talian kami bertujuan hanya untuk tujuan pendidikan/maklumat dan tidak mengandungi – dan tidak boleh dianggap mengandungi nasihat kewangan, cukai pelaburan atau dagangan dan cadangan, atau rekod harga dagangan kami, atau tawaran, atau permintaan untuk suatu transaksi dalam sebarang instrumen kewangan atau promosi kewangan yang tidak diminta kepada anda.
Sebarang kandungan pihak ketiga serta kandungan yang disediakan oleh XM, seperti pendapat, berita, penyelidikan, analisis, harga, maklumat lain atau pautan ke laman web pihak ketiga yang terdapat dalam laman web ini disediakan berdasarkan "seadanya" sebagai ulasan pasaran umum dan bukanlah nasihat pelaburan. Sesuai dengan apa-apa kandungan yang ditafsir sebagai penyelidikan pelaburan, anda mestilah ambil perhatian dan menerima bahawa kandungan tersebut tidak bertujuan dan tidak sediakan berdasarkan keperluan undang-undang yang direka untuk mempromosikan penyelidikan pelaburan bebas dan oleh itu, ia dianggap sebagai komunikasi pemasaran di bawah peraturan dan undang-undang yang berkaitan. SIla pastikan bahawa anda telah membaca dan memahami Notifikasi mengenai Penyelidikan Pelaburan Bukan Bebas dan Amaran Risiko mengenai maklumat di atas yang boleh diakses di sini.
