Business | Aviation
Singapore Airlines expects early recovery
Rebound in traffic should be sustained in the near term, although growth-rate may abate, company says
- Reuters
- Published: 00:00 July 27, 2010
- Image Credit: Bloomberg
- A Singapore Airlines plane at Changi Airport in Singapore. The airline has just posted better-than-expected first quarter profits.
Singapore: Singapore Airlines, the world's second-largest airline by market value, said yesterday that a recovery in passenger and freight traffic should be sustained in the near term after posting better-than-expected first quarter profit.
Global airlines are recovering from the worst downturn in aviation history, but some analysts doubt if the rebound can be sustained with the euro zone debt crisis threatening demand for long-haul flights.
2010 outlook
Singapore Airlines said: "Advance bookings indicate that the year-on-year recovery in passenger carriage and yields evident in the quarter to June will hold up for the rest of 2010.
"Similarly, leading indicators...suggest that recent resurgence in air freight may be sustained in the near-term, although the rate of growth may abate."
The International Air Transport Association said this month global airlines will turn a $2.5 billion (Dh9.1 billion) profit this year, a stunning swing from the substantial loss of $2.8 billion the industry group forecast three months ago.
The recovery was tainted when a volcanic eruption in Iceland caused havoc in air travel earlier this year.
Singapore Airlines, whose competitors include Australia's Qantas and Hong Kong-listed Cathay Pacific, racked up costs of S$50 million (Dh133 million) as a result of the disruption.
"Notwithstanding the short-term negative effect from the Iceland volcano, I think everything appears to be coming on strongly for Singapore Airlines," said Sukhor Yusof, an analyst at Standard & Poors.
"An increase of 15 per cent in [passenger] yield is considered strong given that they did not add capacity or increase the number of aircraft other than what they have on the delivery schedule," he said.
Singapore Air's passenger yield improved to 11.7 Singapore cents per passenger kilometre from 10.2 Singapore cents a year ago.
Main issue
Sukhor said fuel costs and the stability of demand for European traffic, a key profit area for Singapore Airlines, would be the main issue that investors would need to monitor for the remainder of this year.
Singapore's flag carrier posted an April-June net profit of S$253 million, beating analysts' forecasts of S$232 million and compared with a S$307 million loss a year ago when the airline recorded its first quarterly loss in six years.
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