Singapore Airlines Group annual net profit down 55%

Jay Anderson
May 20, 2017

Noting that SIA's budget carriers, Tiger Air and Scoot, had done better than their parent airline, Shukor said this indicates "that the growth for the SIA Group is pretty much now in the low-priced segment of the business".

SIA said its full-year net profit shrank by 55.2 percent to 360 million Singapore dollars (258.60 million US dollars) partly due to net loss recorded in the January-March period.

The changes have started already, with SIA's announcement yesterday that SIA Cargo, its wholly owned subsidiary, will be re-integrated as a division within the group.

SIA is following in the footsteps of the other marquee Asian carrier Cathay Pacific Airways, which has embarked on a three-year revamp to cut costs after reporting its first floss in eight years.

Singapore Airlines (SIA) on Thursday reported a net loss in the fourth quarter, causing full-year profit to drop by more than half as intense competition continued to buffet the carrier.

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Besides a weaker operating profit (-$58m), SIA says the deterioration in group net profit was largely attributable to SIA Cargo's provision for competition-related matters (-$132m) and absence of a refund received a year ago (-$117m).

"The addition of more modern, fuel-efficient aircraft with new-generation cabin products is enabling the Group to expand its network and enhance its competitiveness in both the full-service and low-priced market segments", SIA said. "We are retaining the business, hence, will need most of the employees to continue operating our cargo business as a division of the airline", he told reporters on Friday.

"A dedicated Transformation Office is conducting a wide-ranging review, encompassing network and fleet, product and service, and organisational structure and processes, to better position the Group for long-term sustainable growth across its portfolio of full-service and budget airline operations". The carrier's load factor fell marginally to 79 per cent as capacity cuts lagged passenger falls. "It will improve efficiency and offer greater flexibility for staff deployment by maximising synergies with the larger SIA business", says SIA chief executive Goh Choon Phong.

SIA Cargo was previously a division of SIA until July 2001, when it became a separate company within the SIA Group. For a group of staff for whom alternative job positions have yet to be confirmed, placement opportunities will be facilitated elsewhere within the SIA Group.

"The airfreight market has since seen structural change, however, and SIA Cargo's freighter fleet has been "right-sized" in recent years to the current seven aircraft while the proportion of revenue from passenger aircraft "bellyhold" capacity has increased significantly", said SIA in its announcement.

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