Tuesday February 10, 11:25 AM
Singapore Airlines' net profit down 42.8% in Q3
By Martin Abbugao
SINGAPORE (AFP) - Singapore Airlines (C6U.SI - news) (SIA) said Tuesday its net profit fell an annual 42.8 percent in the third quarter to December as it carried fewer passengers and cargo due to the global economic downturn.
SIA, one of Asia's major airlines, forecast a bleak outlook for this year, confirming projections by economists that the global economic situation will worsen before improving.
The airline became the latest major carrier to report a big profit fall or losses during the global economic slowdown, which has hurt travel worldwide.
Net profit came in at 337 million Singapore dollars (225 million US), from 590 million dollars, on revenue of 4.16 billion dollars which was down 2.6 percent year on year, the airline said in a statement.
SIA said it carried 4.8 million passengers in the October to December period, down 4.2 percent from the same quarter the year before as travel demand took a hit.
It also carried 14.2 percent less freight during the quarter, mirroring a sharp fall in global trade as economies worldwide reel from the impact of the financial crisis.
"Demand for air transportation is expected to remain weak for much of 2009," SIA warned.
"The company will continue to monitor the patterns of demand and make appropriate adjustments to flight schedules and capacity while managing costs tightly."
SIA announced late last month the suspension of some international flights, saying it did not want to fly half-empty planes around the world. Flights to India, Southeast Asia, the United States and Europe were among those affected.
The airline said it was also reducing its all-business-class service to New York and Los Angeles.
In its statement Tuesday, SIA said group expenditure rose 5.7 percent, as gains from declining jet fuel prices were eroded by hedging losses totalling 341 million Singapore dollars.
"Foreign exchange rate movements lowered operating profit by 144 million dollars as major revenue generating currencies, particularly the Australian dollar, the UK pound and the euro, weakened against the Singapore dollar, even as the Japanese yen and the US dollar strengthened," it said.
SIA shares closed four cents higher at 10.44 dollars prior to the announcement.
Airlines in the Asia-Pacific (002790.KS - news) region are cutting routes and taking other measures in a bid to deal with the drastic drop in travellers and cargo, and analysts said some carriers may be forced to slash jobs.
The region was the airline industry's booming market in recent years but its international passenger traffic fell 9.7 percent in December over the previous year, the sharpest decline in any region, the International Air Transport Association (IATA) has said.
Regional airlines, which account for 45 percent of global cargo, also registered the steepest fall in freight traffic, with a 26 percent decline last month, said IATA, the industry's trade organisation.
Japan Airlines, Asia's largest carrier, said this month it expected a net loss of 34 billion yen (374 million US dollars) in the year to March, scrapping an earlier forecast for a 13-billion-yen annual net profit.
All Nippon Airways (ANA) is now projecting a loss of nine billion yen for the financial year to March 31 instead of a profit.
South Korea's largest airline, Korean Air, this month reported a sharply higher net loss of 659.5 billion won (474 million dollars) in the fourth quarter.
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