A Singapore Airlines Airbus A350-941 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 Singapore Airlines It fell after the country's flag carrier reported a nearly 50% drop in net profit in the first half of the April-September period, citing falling revenues and increased competition.
As markets opened on Monday, the stock fell as much as 6.2%, before later recovering to trade down 3.57%.
Net profit in the first half of the financial year was S$742 million (US$559.12 million), 48.5% lower than S$1.44 billion in the same period last year.
The company's operating profit fell 48.8% to S$796 million, down from S$1.55 billion last year, while revenue rose 3.7% to S$9.5 billion.
Despite the decline in profits, the airline maintained an interim dividend of 10 Singapore cents per share.
Singapore Airlines said in a statement that the decline in operating profits was due to “increased capacity and strong competition in key markets,” which ultimately led to lower revenues and profits.
Speaking at an earnings press conference, SIA's chief commercial officer Lee Leek Hsien said the company was seeing tougher competition globally, adding that other airlines were recovering to pre-Covid capacity.
SIA CEO Goh Choon Phong also said that capacity recovery has also put more pressure on revenues compared to the previous year.
Passenger traffic grew 7.9% year-on-year, but this was less than the 11% passenger capacity expansion, Li said. This means that passenger load factor – which measures the amount of capacity being used – fell by 2.4 percentage points year-on-year to 86.4%.
SIA will not “hold back on capacity growth just because there is competition in the market,” Lee added.
Strong but competitive outlook
While demand for air travel is expected to be strong in the second half of the financial year, “the operational landscape will remain competitive,” SIA added.
SIA last Monday announced a S$1.1 billion cabin modernization program for 41 Airbus A350 long-haul and long-haul aircraft.
The first modified long-range aircraft will enter service by 2026, and the program will be completed by 2030, the airline said.
