Singapore Airlines posts 36.2% drop in profit

Singapore Airlines, the national airline of Singapore, has said that it has suffered a 36.2% decline in profits from the previous year and “the outlook remains weak as the global economic recession has escalated.”

The profits of Singapore Airlines in the three months to September 30, 2008, dropped to Singapore $324 million (£137 million), a statement from the company said.

The share price of Singapore Airlines, which is 55% owned by Temasek, Singapore’s sovereign wealth fund, has fallen by 29% since the start of 2008.

The airline also gave a warning that advance passenger bookings for the New Year were weak.

Singapore Airlines Limited, which owns 49% of Virgin Atlantic, operates a hub at Singapore’s Changi Airport. It has a strong presence in South-east Asia, East Asia, South Asia and Australia. It also operates trans-Pacific flights, including the non-stop commercial flight from Singapore to Newark, New Jersey, the United States, on the Airbus A340-500. Singapore Airlines is also the launch customer of the Airbus A380 Superjumbo, the world’s largest passenger airliner.

A survey conducted by Dow Jones Newswires among aviation analysts had forecast a net profit of $ 333 million for Singapore Airlines.

According to the statement from Singapore Airlines, revenue was up by 9.4% at $4.38 billion, compared to the same quarter in 2007. However, expenditure jumped by 20.3% to $4.15 billion, mainly on account of higher costs of fuel.

The statement said: “Singapore Airlines spent $1.92 billion on fuel during the quarter, or 46% of the total expenditure. The financial turmoil around the world and weak consumer confidence are impacting demand for air transportation. Though advance bookings for the immediate next quarter are holding up reasonably well, there are signs of weakness beyond that. Fuel prices have retreated, but fuel remains the biggest single item of operating expenditure. The recent volatility in currency markets presents another challenge.”

“As fuel and aircraft-related payments are made in US dollars,” the airline added, “the sharp appreciation of the greenback and the concurrent depreciation of the euro, British pound and the Australian dollar has affected the company. In such an environment, the company’s sound finances and low level of debt put it in a position of strength. The management will monitor business trends closely and respond appropriately.”

Singapore Airlines said it took delivery of there Airbus A380-800 aircraft and four Boeing B777-300ER aircraft during the fiscal first half of 2008. As of September 30, 2008, the carrier had a fleet of 101 aircraft, with an average age of 6 years and 3 months.

Owing to weaker demand, Singapore Airlines said it suspended services to Osaka in Japan via Bangkok from May 2008 and to Los Angeles in the United States via Taipei, Taiwan, from October 2008.

And, from February 2009, the airline will suspend services to Amritsar in India.