Singapore Airlines half-year profit down 44 per cent as rising fuel costs bite

Singapore Airlines uses an A350-ULR to fly from Singapore to New York. Photo / Supplied

Singapore Airlines' half-year profit has been walloped by soaring fuel costs.

The airline, which is expanding operations in New Zealand over summer, reported a profit of S$426 million (NZ$455m) to the end of September, down 44.1 per cent on the corresponding period last year.

The second quarter fall was even more dramatic, falling 81 per cent plunge to S$56.4 million.

Fuel costs in the six months were up S$379m, or 20.4 per cent.

Although jet fuel prices have dipped in the last month, across the industry they are still 15 per cent higher than they were a year ago.

During the six months of Singapore Airlines' result, they rose by 39 per cent as Opec and other oil-producing nations kept a lid on supply at a time of firm global demand.

Hedging did help soften the blow of increased fuel prices but its subsidiary airlines, SilkAir and Scoot sunk to losses of $3m and $10m largely due to higher fuel costs.

The SIA Group has a 20 per cent stake in Virgin Australia and this also hit the result.

It had to recognise an increase in share of losses ($97 million) of its associated companies for the period, mostly due to Virgin Australia, whose results were impacted by accounting adjustments.

During the first half Singapore Airlines' total revenue rose from $7.7 billion to 7.9b.

Passenger revenue lifted by nearly 9 per cent outpacing growth n capacity of 5.4 per cent.

During the period, the airline took delivery of two of seven A350-900ULRs on firm order.
The first of the aircraft entered service in October flying the longest commercial route from Singapore to New York.

In its outlook it said bookings in the coming months were expected to be stronger year-on-year.

''However, headwinds continue to persist in the form of cost pressures arising from significantly elevated fuel prices compared to a year ago, as well as keen competition in key operating markets,'' the airline said.

''Notwithstanding concerns over global trade tensions, cargo demand in the near term is expected to remain healthy during the seasonal peak.''

In New Zealand the airline has stepped up its service between Auckland and Singapore to twice a day in addition to the once-daily flight operated by Air New Zealand. From January will use an A350-900 on the Singapore-Christchurch route.