SIA profit falls 59% in Q2 as capacity outpaces travel demand

Airline hit by rising costs; expects pressure from increasing competition to continue

- Kang Wan Chern

Singapore Airlines (SIA) has signaled that it expects pressure from rising competition to continue despite "robust" demand for air travel.

The warning came as the airline reported a substantial fall in profit for the second quarter of its financial year owing to a gap between passenger traffic and newly deployed capacity, as well as rising costs.

"The operating landscape will continue to be competitive," SIA said in its results report for the quarter ended Sept 30, released after the market closed on Nov 8.

"The group will remain nimble and agile, adjusting its passenger network and capacity to match evolving demand patterns."

Despite the lucrative summer holiday travel season, the airline reported a rise of just 2 per cent in revenue to $4.8 billion for the second quarter compared with a year ago.

This is because it earned less money for each passenger flown as the new capacity that came online during the quarter outweighed growth in passenger traffic.

Meanwhile, costs jumped by 14.7 per cent over the period. They included fuel costs, which rose 10.6 per cent after hedging.

Consequently, the airline's net profit for the July-to-September quarter more than halved from a year ago, falling 59 per cent to $290 million.