SIA undertaking review after reporting big drop in full year profit

Share

The airline expects to take delivery of ten A350-900s and three A380-800s during the 2017-18 financial year, and remove two A330-300s, four A380-800s, two 777-200s and one 777-200ER from the fleet, again as leases expire.

Net loss in the quarter through March was S$138.3 million, the first since the same period in 2012, compared with an estimate for a profit of S$54.3 million in a Bloomberg survey of analysts. "We are retaining the business, hence, will need most of the employees to continue operating our cargo business as a division of the airline", he told reporters on Friday.

"Similar to Cathay, evidently, the pressure from competition and the lack of a domestic market" are hurting SIA, said Mr Joshua Crabb, head of Asian equities at a unit of Old Mutual Plc.

The review, led by a new Transformation Office, will also look at jobs.

"But what the company will do is to ensure that we provide opportunities for retraining and redeployment".

The airline has also announced today that its SIA Cargo subsidiary will be reintegrated into the main airline. The process, aimed at improving efficiency, is expected to be completed in the first half of 2018.

Singapore Airlines (SIA), South-east Asia's biggest carrier, said it has started a wide-ranging review of its business to better position the group for long-term sustainable growth after reporting a surprise fourth-quarter loss.

More news: Shkodran Mustafi hopeful Arsenal can qualify for Champions League

The review will not impact customers, he said. The planes are on lease and will be 10-years old by the time they leave Singapore Airlines' fleet.

"The addition of more modern, fuel-efficient aircraft with new-generation cabin products is enabling the Group to expand its network and enhance its competitiveness in both the full-service and low-priced market segments", SIA said.

To position the group for growth in the budget and regional markets, SIA took a stake in budget carrier Tigerair, which was set up in 2003, and now owns the entire airline. Ex-fuel costs rose SGD$468 million, however, as the carrier's budget airlines, Scoot and Tiger Airways added double-digit capacity.

For the full year, parent carrier Singapore Airline's operating profit was S$386 million, down 20% YOY.

A year ago, the split was about 80/20. SIA's dismal earnings report card prompted a number of analysts to cut their target prices on Friday.

Almost 4.8 million shares changed hands following the airline group's first fourth-quarter loss in three years, with the counter hitting a low of S$9.97 during the day's trading.

"I think pressure on profits will continue to intensify".

Share