An Airbus A350-941 belonging to Singapore Airlines is poised for takeoff at Barcelona-El Prat Airport on May 1, 2024. Meanwhile, Singapore Airlines’ shares experienced a notable decrease following the company’s report of a nearly 50% drop in net profit for its first half, covering April to September. The decline in profit is attributed to lower yields and intensifying competition. The stock initially fell by 6.2% as markets opened, before stabilizing to a 3.57% decline.
The airline’s net profit for the period stood at SG$742 million ($559.12 million), a sharp decrease from SG$1.44 billion the previous year. Operating profit also fell by 48.8% to SG$796 million, despite a revenue increase of 3.7% to SG$9.5 billion. Despite this downturn, Singapore Airlines maintained an interim dividend of 10 Singapore cents per share.
The airline attributed the decline in operating profit to increased capacity and stiffer competition in key markets, leading to reduced yields. SIA Chief Commercial Officer Lee Lik Hsin noted that competition has become more intense as other airlines recover to pre-Covid capacity levels. This resurgence in capacity has placed additional pressure on yields.
Passenger traffic increased by 7.9% year-on-year, though it lagged behind the airline’s 11% expansion in passenger capacity, resulting in a drop in passenger load factor to 86.4%. However, SIA intends to continue expanding capacity despite market competition.
Looking forward, Singapore Airlines expects robust demand for air travel in the second half of the fiscal year, though it anticipates ongoing competitive challenges. Last week, the airline announced a SG$1.1 billion cabin retrofit program for its fleet of 41 long and ultra-long-range Airbus A350 jets, with the first retrofitted aircraft set to enter service by 2026 and project completion by 2030.
Original Story https://www.cnbc.com/2024/11/11/sia-shares-fall-6percent-as-profit-nearly-halves-amid-intensifying-competition.html
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