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SINGAPORE: Singapore Airlines said its full-year net profit more than doubled on higher income from investments and reduced losses from associate companies as fuel expenses fell due to lower oil prices.
A refund for a fine paid by the carrier’s cargo arm in the previous financial year also bolstered earnings, but the airline said the competitive environment remained “challenging” due to weak global economic growth and expanding capacity.
Group net profit for the year ending March 31 came in at Sg$804.4 million ($587 million), up 118.5 percent from the year before. Revenue eased 2.2 percent to Sg$15.23 billion, SIA said in a filing with the Singapore Exchange.
Net profit for the fourth quarter soared more than five times to Sg$224.7 million from Sg$39.6 million.
The airline said dividends from long-term investments were higher by Sg$102 million and its share of losses from associated firms fell by Sg$118 million, while it also received a Sg$117 million refund for a fine paid by SIA Cargo the year before.
Group expenditure fell, largely due to a 19 percent decline in fuel costs as jet fuel prices tumbled, but the savings were partially offset by hedging losses. Fuel accounts for around one third of SIA’s expenditures.
World oil prices are currently down 60 percent from peaks of more than $100 per barrel in mid-2014.
The airline said it was “contending with a challenging operating environment in key markets, caused in part by weak economic activity and relatively rapid growth in capacity.”
SIA is facing tough competition from Middle East carriers in the long-haul premium segment, while budget airlines have taken market share in the economy section for short-haul routes.
“Nevertheless, the group is well positioned to compete in this environment,” SIA said, citing the entry into its fleet of the long-range, fuel-efficient Airbus A350-900 which it will use to open more routes.
SIA also has taken full ownership of budget carrier Tiger Airways while operating a medium- and long-haul no-frills airline called Scoot, allowing it to operate across a range of market segments.
“For the April-June 2016 quarter, advance passenger bookings are tracking positively against seat capacity,” it said.
However, “outlook remains cautious for air cargo amid the economic slowdown in China and ongoing uncertainty surrounding the global economy,” it said.
“Coupled with ample capacity in the industry, yield remains under pressure,” it said.