Singapore Airlines Group annual net profit down 55%

Singapore Airlines Group annual net profit down 55%

"The size of the loss is quite staggering for the three months and it would indicate that SIA would need to do something drastic and radical to overcome its difficulties in the coming years", he told AFP.

Singapore Airlines has been facing its fair share of turbulence after shares dived off the back of the carrier's surprise loss.

Singapore Airlines (SIA) announced a major business transformation of the national carrier on Friday (May 19), after reporting an unexpected fourth-quarter net loss of S$138 million.

SIA has been battling strong competition from Asian low-priced carriers and Middle Eastern airlines, which now boast modern fleets and top-quality inflight services.

The integration is not expected to have a material impact on SIA's financial performance in the 2017/18 financial year.

SIA said the new aircraft would enable the group to expand its network and boost competitiveness in both the full-service and low-priced segments. The two budget carriers are merging to operate under the Scoot brand from the second half of 2017.

A new office has been set up to conduct a review, encompassing network and fleet, product and service as well as organisational structure and processes, to better position the group for long-term sustainable growth across its portfolio of full-service and budget airline operations.

"The review is aimed at identifying new revenue-generation opportunities and reshaping the business into one that continues to deliver high-quality products and services, though with a significantly improved cost base and higher levels of efficiency", SIA said. Expenses were down 2.1% YOY to S$14.2 million, producing an operating profit of S$622.8 million, down 8.6% YOY.

"It would be interesting to see how Singapore Air Group's transformation plans compare with Cathay's", said Ms Corrine Png, chief executive officer at Crucial Perspective Pte in Singapore. Passenger flown revenue declined $382m (-3.2%) despite traffic growth (+2.6%) as yields continued to come under intense pressure. A $25m increase in revenue was partially diluted by a 7.4 per cent fall in yield and increased expenditure as the airline expanded capacity by 10.6 per cent. The soft worldwide cargo market helped push yield down 10.7 percent though, contributing to a revenue decline of SGD$89 million.

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