Reuters: Singapore Airlines Ltd (SIA) reported a near doubling of its third-quarter operating profit, helped by lower fuel costs, but said intense competition in Southeast Asia will put pressure on its performance.
The carrier, a benchmark for Asia’s full-service airline industry, said on Thursday that it expects the challenging operating environment to persist.
“On the competitive front, expansion of other full-service airlines as well as low-cost carriers, particularly in Southeast Asia, will continue to exert pressure on loads and yields,” it said in a statement.
The airline, 56% owned by sovereign investor Temasek Holdings, reported an operating profit of S$ 288 million ($ 205 million), up 96% from a year ago, while net profit rose 35.5% to S$ 275 million.
SIA’s business model hinges on using its hub at Singapore’s Changi Airport to connect passengers within Asia and to Europe, Australia and the United States. It also has a presence in the low-cost segment through Tiger Airways and Scoot.
“While more relief could arise from lower fuel prices, which have declined to a 12-year low, fuel continues to make up a significant portion of the Group’s expenditure, with 46.6% of the Group’s fuel requirement in the fourth quarter hedged at a weighted average price of $ 90 per barrel,” SIA said.