A Singapore Airlines Airbus A350-941 prepares for takeoff on the runway at Barcelona El Prat Airport on May 1, 2024 in Barcelona, Spain.
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Singapore — stocks of singapore airlines Shares fell after the city-state’s flag carrier reported an almost 50% drop in net profit for the first half of the year from April to September, citing lower crop yields and increased competition.
Shares fell as much as 6.2% when the market opened on Monday, but have since recovered to trade 3.57% lower.
Net profit for the first half of the financial year was S$742 million ($559.12 million), down 48.5% from S$1.44 billion in the same period last year.
The company’s operating profit fell 48.8% to S$796 million from S$1.55 billion in the same period last year, while revenue rose 3.7% to S$9.5 billion.
Despite the decline in profits, the airline maintained an interim dividend of 10 Singapore cents per share.
Singapore Airlines said in a release that the decline in operating profit was due to “increased capacity and increased competition in key markets”, which led to lower yields and, in turn, lower profits.
SIA Chief Commercial Officer Li Lixin said in an earnings call that the airline is facing increased competition globally, adding that other airlines are also returning to pre-pandemic capacity.
SIA CEO Goh Choon Fung also said the recovery in production capacity had increased pressure on yields compared to a year ago.
Passenger traffic increased by 7.9% year-on-year, but this was less than the 11% expansion in passenger capacity, Lee said. This means that the passenger load factor, which measures an airline’s passenger capacity usage, decreased by 2.4 points from the previous year to 86.4%.
However, Lee added that SIA “does not intend to hold back production capacity expansion just because there is competition in the market.”
Solid but competitive outlook
Demand for air travel is expected to remain strong in the second half of the financial year, but “the operating environment will remain competitive,” SIA added.
Last Monday, SIA announced a S$1.1 billion cabin renovation program for 41 long-range and ultra-long range jets.
The airline said the first refurbished long-range jet will enter service by 2026 and the program will be completed by 2030.
