Increased fuel costs causes dip in profits for Singapore Airlines

Singapore Airlines, the most commercially successful airline in Asia suffered sharp dip in its net earnings for the second quarter of this financial year. This translates to a fall of 1.7% to S$15.02 and trade price of S$15.08. The decreased income was confirmed by Singapore Airlines while stating that the quarter ending June marked profit cuts by 15 % to S$358.6.

This state of affairs has resulted from the enormous increase of 31% in fuel costs that Singapore Airlines has borne, that follows the hike in jet kerosene prices in the same year. With the travel season in a slump, financial analysts predict that things are not looking too bright on the profit front for Singapore Airlines. Travel by air is on the wane leading to weakening of pricing advantage and this too will erode profits for Singapore Airlines, according to industry analysts. Further, the airline was giving the rating of an underperforming organization. Every succeeding quarter till year end will see further decline in profits of Singapore Airlines amounting to an annual dip of 31% in net earnings.

The picture is not too bright for the industry at large. Most of Asia-Pacific airlines have announced economy measures; cut down on the number of flight routes and reduced recruitments. Cathay Pacific Airways Ltd. has predicted that they do not expect to make good profits. The airline industry across the world is expected to suffer an annual loss of $6.1 billion; the deepest crisis it has faced since year 2003.

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