Singapore Airlines First-Quarter Profit Fell as Passenger Yields, Fuel Prices Weigh

By Kimberley Kao

Singapore Airlines reported lower profit in its first quarter, weighed by fuel costs and lower passenger yields.

The city-state's flag carrier said Wednesday that net profit for the three months ended June was 452 million Singapore dollars, equivalent to US$336.8 million, down from S$734 million a year earlier. Profit was weighed by higher net fuel costs and a 4.6% decline in passenger yields despite a 14% increase in passengers carried, it said.

Operating profit fell 38% to S$470 million on higher expenditure, while revenue rose 5.3% to S$4.72 billion, helped by capacity growth and an increase in cargo load factor.

"Passenger yields are expected to stay below the previous year's levels as more capacity enters the market, particularly in the Asia-Pacific region," the airline said. However, Singapore Airlines expects air-travel demand to stay healthy in the coming months.

The airline industry "continues to contend with heightened competition, supply chain constraints, inflationary cost pressures, and geopolitical uncertainties," it said.

Analysts had been watching cargo and passenger yields and the impact of high fuel prices.

In a recent note, Nomura analysts reduced the company's fiscal 2025 net profit forecast by 14% amid uncertainties surrounding tariffs and geopolitical implications for trade. They said they also expected some weakness in passenger yields due to heightened competition.

Nomura downgraded the stock to neutral from buy recently, citing a lack of catalysts and moderating yields.

The proposed merger of Air India and Vistara, a joint venture of Tata Sons and SIA, remains on course, SIA said. The merger, which will give SIA a 25.1% stake in an enlarged Air India Group, will help it expand its presence in India and be directly involved in the "rapidly-growing aviation market."

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

July 31, 2024 06:32 ET (10:32 GMT)

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