SIA is fighting to prevent travellers from switching to Emirates Airline, which is offering luxuries like on-board shower, while budget carriers are chipping away at the coach class. The result: The lowest yield from passengers in six years. Yields were 10.6 Singapore cents in the year ended March, dropping from 11.2 cents a year earlier. That damped full-year net income to S$804m, or about a quarter of what Emirates racked up in the same period. Southeast Asia’s biggest airline by market value is facing increasing challenges to retain customers as the Middle East carriers expand more into the region and about a dozen low-fare offerings seek to win business on short-haul routes from Singapore to resorts like Bali and Phuket. To fight back, CEO Goh Choon Phong, 52, has ordered more than $10b of new aircraft and formed alliances from Australia to India as Asia is poised to become the world’s biggest travel market in two decades. “They’re being squeezed in many different fronts,” said Shukor Yusof, founder of aviation consultant Endau Analytics in Malaysia. “The market dynamics have changed forever for Singapore Air.” The flag carrier Thursday reported Q4 profit that lagged behind analyst estimates as losses from fuel-hedging countered gains from carrying more passengers during the Lunar New Year holiday season. Net income jumped more than fivefold to S$224.7m in the quarter ended March, the carrier said. Analysts estimated Singapore Air to report a profit of S$249.2m. "The group is contending with a challenging operating environment in key markets, caused in part by weak economic activity and relatively rapid growth in capacity, evidenced by increasing promotional fare activity," Singapore Air said in the statement. Booking in the current quarter "are tracking positively against seat capacity," it said.<br/>
star
The Singapore Airlines management team and its auditors at KPMG have discussed "different possible scenarios" about the financial position and capital needs of Virgin Australia after Air New Zealand placed its 25.9% stake up for sale. Notably, both agreed there was no need for an impairment of Singapore's stake in Virgin even though it is trading below the value at which Singapore bought it based on the scenarios discussed. Singapore CEe Goh Choon Phong Friday told analysts his airline was watching the situation at Virgin "closely", according to Bloomberg. Singapore last month raised its stake in Virgin to 23.11% from 22.91% at a price of 46.72¢ a share, leading to analyst speculation it might buy the Air New Zealand stake and make a bid for the remainder of the Australian carrier. Singapore already agreed to participate in extending a $425m 12-month debt facility to Virgin while it undertakes a review of its balance sheet. The other major shareholders, Air New Zealand, Etihad Airways and Sir Richard Branson's Virgin Group are also lending funds in proportion to their shareholdings in the company.<br/>
Lufthansa and Cathay Pacific have agreed a partnership on freight routes between Hong Kong and Europe. Lufthansa has been signing cooperation deals with other major airlines, including United and ANA, in order to improve its freight network and offer more flights to customers in an increasingly difficult freight market. Lufthansa and Cathay said the agreement would see them work together on network planning, sales, IT and ground handling. The first shipments under the cooperation deal will fly early next year from Hong Kong to Europe with routes from Europe to Hong Kong to be made available later in the year.<br/>