DEE-DUCK
11th May 2005, 11:03
Singapore Airlines 4th-Qtr Profit Falls 38% on Fuel (Update1)
May 11 (Bloomberg) -- Singapore Airlines Ltd., Asia's biggest carrier by market value, had it first profit decline in eight quarters as fuel prices surged and an increase in the number of low-fare competitors caused ticket prices to fall.
Net income in the three months ended March 31 fell 38 percent to S$297.8 million ($181 million), from S$477.9 million a year earlier, the airline said today in a statement. That compared with the median estimate of S$219 million in a Bloomberg survey of eight analysts.
Chief Executive Chew Choon Seng, 58, has been unable to pass on record jet-fuel prices to customers as Valuair Ltd. and 11 other discount carriers, as well as full-service airlines including Emirates, expanded in the region. Airlines including Japan Airlines Corp. have said profits will continue to fall this year as cost cuts and surcharges fail to cover fuel costs.
The ability to pass on costs to passengers ``will be limited given that there is more competition now,'' said Mark Tan, an investment strategist at UOB Asset Management Ltd. in Singapore, which manages $3.5 billion of assets, including Singapore Airlines shares. ``If fuel prices remain at the levels they are right now, airlines costs are going to go up.''
Singapore Airlines' sales rose to S$3.03 billion in the quarter from S$2.86 billion a year earlier.
The airline said its fuel bill in the fourth quarter rose 37 percent to S$702.3 million. Chew said fuel costs made up 25 percent of the carrier's full-year expenses. He said the airline is planning to hedge 32 percent of its fuel costs for the fiscal year 2006.
``There are more challenges ahead and we cannot be complacent,'' Chew said in a statement.
The jet fuel price surged to a record $76.38 a barrel in Singapore on April 4, according to the Platts pricing service. The average price rose 51 percent in the three months ended March 31 to $57.57 from $38.23 a year earlier. It slipped 0.08 percent to $65.33 a barrel on May 10.
May 11 (Bloomberg) -- Singapore Airlines Ltd., Asia's biggest carrier by market value, had it first profit decline in eight quarters as fuel prices surged and an increase in the number of low-fare competitors caused ticket prices to fall.
Net income in the three months ended March 31 fell 38 percent to S$297.8 million ($181 million), from S$477.9 million a year earlier, the airline said today in a statement. That compared with the median estimate of S$219 million in a Bloomberg survey of eight analysts.
Chief Executive Chew Choon Seng, 58, has been unable to pass on record jet-fuel prices to customers as Valuair Ltd. and 11 other discount carriers, as well as full-service airlines including Emirates, expanded in the region. Airlines including Japan Airlines Corp. have said profits will continue to fall this year as cost cuts and surcharges fail to cover fuel costs.
The ability to pass on costs to passengers ``will be limited given that there is more competition now,'' said Mark Tan, an investment strategist at UOB Asset Management Ltd. in Singapore, which manages $3.5 billion of assets, including Singapore Airlines shares. ``If fuel prices remain at the levels they are right now, airlines costs are going to go up.''
Singapore Airlines' sales rose to S$3.03 billion in the quarter from S$2.86 billion a year earlier.
The airline said its fuel bill in the fourth quarter rose 37 percent to S$702.3 million. Chew said fuel costs made up 25 percent of the carrier's full-year expenses. He said the airline is planning to hedge 32 percent of its fuel costs for the fiscal year 2006.
``There are more challenges ahead and we cannot be complacent,'' Chew said in a statement.
The jet fuel price surged to a record $76.38 a barrel in Singapore on April 4, according to the Platts pricing service. The average price rose 51 percent in the three months ended March 31 to $57.57 from $38.23 a year earlier. It slipped 0.08 percent to $65.33 a barrel on May 10.