Source: Reuters Author: Daryl Loo 07/28/2008
Subject Concerned: Airlines
Singapore Airlines, the world's second-biggest airline by market value, posted a 15 percent fall in quarterly profit, hit by soaring jet fuel costs and slowing demand for air travel, but still managed to beat market expectations.
Singapore Air, which at US$13.4 billion ranks behind Air China, said April-June net profit was S$358.6 million (US$263 million) compared with S$424 million a year ago. This beat an average forecast of S$286 million from three analysts polled by Reuters.
Revenues for the airline, which relies on premium and business travellers for half its sales, were S$4.13 billion compared with S$3.6 billion a year ago.
Asian airlines face a massive hit to earnings as soaring fuel costs and dwindling demand create turbulence that has already bankrupted some small carriers.
Jet fuel traded in Singapore JET-SIN has come off a peak hit this month above US$181 per barrel but is still about 80 percent above levels seen a year ago, reflecting the spike in crude oil.
The group, 55 percent-owned by sovereign fund Temasek, has reported five straight months of falling combined passenger and cargo loads, as demand failed to keep pace with higher capacity boosted by the delivery of five Airbus A380 superjumbos.
Singapore Air shares are down 12 percent since the start of the year, outperforming the benchmark Straits Times index's 16 percent fall and rivals Qantas, which fell 36 percent, and Cathay Pacific, down 24 percent.