Singapore Airlines 3rd-Quarter Profit Misses Estimates
By Gaurav Raghuvanshi
SINGAPORE--Singapore Airlines Ltd. (C6L.SG) Tuesday reported sharp gains in its fiscal third-quarter net profit, mainly because of a one-time charge in the same period of last year, but missed analyst estimates.
Net profit in the October-to-December quarter was 286.1 million Singapore dollars (US$216.2 million), compared with S$177.2 million in the same period of the previous year. Analysts had expected net profit of S$304 million, according to FactSet.
Revenue rose 6.0% on year to S$4.08 billion.
Passenger yield fell marginally to 10.4 Singapore cents a kilometer in the third quarter, compared with 10.5 Singapore cents per kilometer in the previous year. Yield, or revenue per passenger per kilometer flown, is an important metric of an airline's ability to generate revenue.
Despite a stabilization in recent months, pressure on yields remains as "competitors mount significant capacity in key markets with aggressive pricing," Singapore Airlines said.
Singapore Airlines and its regional rivals such as Cathay Pacific (0293.HK) have seen their ability to charge more for their premium services erode in recent years. Singapore Airlines faces stiff competition from Middle East-based carriers such as Emirates Airline and Qatar Airways on its prized European and U.S. routes, while highly aggressive discount carriers have taken away leisure travelers on shorter routes within Asia.
Singapore Airlines also flagged the recent volatility in fuel prices as a challenge. The airline's fuel bill rose 9.2% on year to S$1.02 billion in the December quarter. Fuel prices are rising and are expected to remain volatile, Singapore Airlines said, adding that it has hedged 41% of its jet-fuel requirements at a weighted average price of US$65 a barrel in the current quarter.
Write to Gaurav Raghuvanshi at firstname.lastname@example.org
(END) Dow Jones Newswires
February 13, 2018 05:43 ET (10:43 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.