SIngapore Airlines Conducts Wide Ranging Review As Profit Falls
The airline expects to take delivery of ten A350-900s and three A380-800s during the 2017-18 financial year, and remove two A330-300s, four A380-800s, two 777-200s and one 777-200ER from the fleet, again as leases expire.
The company hasn’t yet revealed details, but an official at Air China, which owns 30 per cent of the carrier, said in March that Cathay will cut more than HK$4 billion (S$716 million) in costs over three years.
“There will certainly be changes in the way we do things and staff will have to pick up new skills”, Mr Goh said.
The move comes after SIA announced on Thursday that it sank into 4QFY17 losses of S$138.3 million, due largely to a S$132 million provision for SIA Cargo for competition-related matters. Pre-tax, the result was a SGD$518.6 million net profit, down from SGD$972.4 million in 2016.
As part of efforts to adapt to this new environment, SIA established Scoot to capture a slice of the growling low-priced long-haul market, while it recently took full control of short-haul LCC Tigerair Singapore.
It added that the reintegration is not expected to have a material impact on SIA’s financial performance in 2017/18 financial year.
Building on this foundation, the next phase of the SIA group’s transformation has been launched, it said.
The process, aimed at improving efficiency, is expected to be completed in the first half of 2018. Ex-fuel costs rose SGD$468 million, however, as the carrier’s budget airlines, Scoot and Tiger Airways added double-digit capacity.
A breakdown of the annual results showed SIA’s mainline operation, dubbed “the parent airline company”, hardest hit with a 20.4 per cent fall in operating profit from $S485m in 2015-16 to $S386m in 2016-17. SIA said this was affected by a 3.8 per cent contraction in passenger yield and a 1.4 per cent decline in passenger traffic. Load factor slipped to 79%.
According to the group, the airfreight market has since seen structural change – and SIA Cargo’s freighter fleet has been “right-sized” in recent years to the current seven aircraft, while the proportion of revenue from passenger aircraft “bellyhold” capacity has increased significantly. The soft worldwide cargo market helped push yield down 10.7 percent though, contributing to a revenue decline of SGD$89 million.