Singapore Airlines, Southeast Asia’s biggest airline, reported profit that missed analyst’s estimates after yields from carrying passengers and cargo dropped.
Net income rose 5.4% to $142.5 million in the three months ended December from $135.2 million a year earlier, the airline said in a statement today. That compared with the $161 million average of four analyst estimates compiled by Bloomberg.
Singapore Air’s yield from carrying passengers dropped 5.8% in the third quarter, trimming gains from carrying more passengers in the three months. Chief Executive Officer Goh Choon Phong, 49, upgraded business-class cabins, sold a stake in Virgin Atlantic Airways Ltd. last year, and started operating a new budget carrier Scoot Pte as competition with Middle East carriers like Emirates and low-fare airlines increases.
“Over the last few months, we started to see the passenger traffic figures coming back a bit more stronger than expected,” said Andrew Orchard, a Hong Kong-based analyst at CIMB Securities HK. “The question now is whether airlines will be able to match the recent passenger traffic rise with ticket price increase. There’s a lot of competition.”
Yields from carrying cargo dropped to 33.5 cents from 34.7 cents a year earlier, the company said in the statement. Passenger yield fell to 11.4 cents from 12.1 cents a year earlier.
Passenger Numbers
The airline carried 4.69 million passengers between October and December, compared with 4.36 million a year earlier, according to company’s monthly filings to the Singapore stock exchange. The carrier filled an average 79.3% of its seats in the quarter, compared with 77.2% a year ago, according to the statement.
In October, Goh ordered 25 Airbus SAS aircraft worth $9.3 billion in list prices, including the double-decker A380, to replace less fuel-efficient models. Singapore Air has a fleet of 19 super-jumbos, which services routes such as Tokyo, Sydney, London and Zurich. The carrier also said then it would end the world’s longest non-stop flights, from Singapore to Newark, New Jersey, and Los Angeles.
Global air passenger traffic grew 5.3% last year, boosted by the expansion of Middle Eastern carriers and demand from markets in Latin America and Africa, the International Air Transport Association said on Jan 31. Cargo demand fell 1.5% in 2012. Passenger traffic may grow 4.5% in 2013, with cargo markets projected to increase 1.4%, IATA said.
Competition
Singapore Air faces increased competition as Qantas Airways, Australia’s biggest, formed an alliance last year with Emirates, the Middle East’s largest airline. The tie-up has received provisional approval from Australia’s antitrust regulator in December.
To compete, Singapore Air in November agreed to buy a 10% stake in Virgin Australia Holdings for $135 million. Also, Virgin Australia took control of the Australian arm of Tiger Airways Holdings.
Singapore Air is the largest investor in Tiger, a short- haul low-fare airline that takes on AirAsia Bhd., Lion Mentari Airlines PT and a dozen other budget carriers that fly in the Southeast Asian region.
Last year, Scoot, a medium-haul budget airline fully owned by Singapore Air, started flying with Boeing 777 aircraft. Singapore Air transferred its orders for the Boeing 787 Dreamliners to Scoot.
Singapore Air in December sold its 49% stake in Virgin Atlantic to Delta Air Lines Inc. for $446 million. The carrier had earlier written down its investment in the UK carrier controlled by billionaire Richard Branson. The deal is expected to close in the fourth quarter.
To cut costs, the airline is offering captains voluntary no-pay leave. The company has a “temporary” surplus of captains, spokesman Nicholas Ionides said last month. Singapore Air last year offered first officers unpaid voluntary leave. The airline last month said it will release 76 pilots that were employed on fixed-terms by June 30 before their contract expire.
No comments:
Post a Comment