An Airbus A350-941 of Singapore Airlines prepares to take off on the runway at Barcelona-El Prat Airport in Barcelona, Spain, on May 1, 2024.
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SINGAPORE – Shares of Singapore Airlines dropped after the flag carrier of the city-state which reported a fall of almost 50% in net profit for the first half of April to the September period, it is less productive and more competition.
When the market opened on Monday, the stock fell as much as 6.2%, before recovering to trade down 3.57%.
Net profit in the first half of the fiscal year came in at 742 one million Singapore dollars ($559.12 million), 48.5% lower than SG$1.44 billion in the same period last year.
Operating profit for the company fell 48.8% to SG$796 million, down from SG$1.55 billion a year ago, while revenue increased 3.7% to SG$9.5 billion.
Despite the drop in profits, the airline still has an interim dividend of 10 Singapore cents per share.
Singapore Airlines said in a release that the fall in operating profit is due to “increased capacity and strong competition in key markets,” which led to a fall in yield and ultimately, profit.
Speaking at the earnings briefing, SIA Chief Commercial Officer Lee Lik Hsin said the company was facing tougher competition around the world, adding that other airlines were recovering at pre-Covid capacity.
SIA CEO Goh Choon Phong also said that capacity recovery also put more pressure on production compared to the previous year.
Passenger traffic grew by 7.9% year-on-year, but this was lower than the 11% expansion in passenger capacity, Lee said. This means that the passenger load factor – which measures the capacity used – fell by 2.4 percentage points year-on-year to 86.4%.
However, SIA will not “stop capacity growth just because there is competition in the market,” Lee added.
Outlook is strong but competitive
While air travel demand is expected to be strong in the second half of the financial year, “the operating landscape will continue to be competitive,” SIA added.
Last Monday, SIA announced a SG$1.1 billion cabin retrofit program for 41 long-haul and long-haul Airbus A350 jets.
The airline says the first long-range jets to be installed will be launched in 2026, and the program will be completed by 2030.
