Singapore Airlines profit sinks on fuel costs, Virgin Australia losses

SIA on Tuesday reported an 81% plunge in Q2 earnings, hurt by higher fuel prices, lower airfares and non-cash losses at its part-owned Virgin Australia Holdings. The airline said bookings in the coming months were expected to be stronger year-on-year. “However, headwinds continue to persist in the form of cost pressures arising from significantly elevated fuel prices compared to a year ago, as well as keen competition in key operating markets,” Singapore Airlines said. The carrier posted a net profit of S$56m (US$40.5m) for the quarter ended Sept. 30, down from S$293m a year earlier. The prior-year figure was restated due to accounting changes. Excluding the S$116m loss relating to its 20% stake in Virgin Australia, the company reported an adjusted net profit of S$172m, down 41% from a year earlier. Group revenue rose 5.4% to S$4.06b during the quarter as the airline added capacity and filled a higher proportion of seats. However, yields, a proxy for ticket prices, fell 2.2% in Q2 compared with a year earlier, failing to help offset the impact of a 24% rise in fuel prices. That yield decline was less steep than a Q1 decrease of 3.2% but bucks a broader global industry trend toward rising fares.<br/>