SINGAPORE — Singapore Airlines' shares declined after the national carrier reported a significant drop of nearly 50% in net profit for the first half of the fiscal year (April to September), attributing the decrease to intensified competition and reduced yields.
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The airline’s stock opened on Monday with a steep decline, dropping as much as 6.2% before stabilizing somewhat to a lower loss of 3.57% by midday.
In terms of financials, Singapore Airlines recorded a net profit of 742 million Singapore dollars ($559.12 million) for this period, representing a 48.5% decrease from the SG$1.44 billion earned in the same period last year.
Similarly, operating profit also saw a 48.8% decline to SG$796 million, down from SG$1.55 billion, though revenue experienced a slight increase of 3.7%, reaching SG$9.5 billion.
Despite the substantial profit decrease, Singapore Airlines upheld an interim dividend of 10 Singapore cents per share, signaling confidence to investors.
The company explained in a release that the drop in operating profit was largely due to "expanded capacity and intensified competition in key markets," which pressured yields and, consequently, reduced profitability.
SIA’s Chief Commercial Officer, Lee Lik Hsin, noted in an earnings briefing that the airline is now facing stronger global competition as other carriers ramp up to pre-pandemic capacity levels.
CEO Goh Choon Phong further highlighted that restoring capacity has added pressure to yields, which are currently weaker than they were last year.
Passenger traffic increased by 7.9% year-on-year; however, this was outpaced by a larger 11% expansion in passenger capacity, leading to a decline in passenger load factor — the percentage of occupied seats — by 2.4 percentage points to 86.4%.
Lee emphasized that Singapore Airlines would not "hold back on capacity growth simply due to competition in the market," suggesting the airline remains committed to expanding despite a competitive environment.
Outlook: High Demand, Competitive Challenges
Looking ahead, Singapore Airlines expects demand for air travel to remain strong throughout the second half of the financial year, although the airline acknowledged that the operating environment would likely remain challenging and competitive.
In a bid to enhance passenger experience, Singapore Airlines announced last Monday a SG$1.1 billion investment in cabin upgrades for its 41 long-range and ultra-long-range Airbus A350 jets.
The first of these retrofitted aircraft is anticipated to be in service by 2026, with the full retrofit program slated for completion by 2030.
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