Singapore Airlines (SIA) Group has reported a net profit of S$149 million ($109.3 million) for the June quarter in its fiscal first period, down 57% year-over-year (YOY) from net profit of $346.5 million in the year-ago period.
SIA Group earned S$193 million in operating profit. Year-over-year, profits fell S$212 million despite an 8.3% increase in passenger traffic, and total passenger and cargo revenue up S$178 million.
SIA—which said increasing fuel prices “adversely affected” its operating performance—reported that fuel costs rose 39.3% to $26 per barrel and total fuel costs for the group rose by S$312 million before hedging. This resulted a 5.6% YOY increase of group expenditure of S$3.7 billion.
The group added that ex-fuel costs were 1.5% higher, partly because of expansion by subsidiaries SilkAir and Scoot. Both airlines added new aircraft and destinations, especially as Scoot took two routes from SilkAir, namely, Langkawi and Pekan Bahru.
SilkAir took two Boeing 737 MAX 8s and withdrew an Airbus A320, while Scoot received a 787-9 and another A320 subleased to India’s LCC IndiGo, and returned two A320s to the lessor.
While the parent SIA and engineering subsidiary SIA Engineering earned S$181 million and S$10 million, respectively, SilkAir and Scoot barely broke even. SilkAir and Scoot reported S$0.2 million and S$1 million profits, respectively, mainly because of rising costs and reduction in yield in both airlines.
Looking forward, SIA revealed the airline will continue to hedge fuel requirements and has hedged 46.3% of its fuel requirements in Mean of Platts Singapore (MOPS) and Brent, at weighted average prices of $65 and $54 per barrel, respectively, for the rest of the year.
SIA will be launching and increasing frequency for North American routes, including the highly anticipated nonstop Singapore to New York-Newark service on the Airbus A350-900ULR beginning Oct. 11, as well as nonstop Singapore-Los Angeles from Nov. 2. The airline will also add three more weekly flights to San Francisco from Nov. 28 this year.
On Oct. 28, a joint service with Air New Zealand will see a third daily flight between Singapore and Auckland, while a fourth daily Haneda service will be introduced from Dec. 28. These are subject to regulatory approvals.