Singapore Airlines saw revenues rise by 3% in the third quarter of 2019 as the city state’s flag carrier recorded revenues of $4.5 billion for the period, which the airline attributed to the success of its three-year transformation plan.
Operating profit increased saw a 15.7% increase of $61 million to $449m for the nine months ending December 31, 2019, with group operating profit increasing by 5.9%. While Singapore said that it was well positioned to deal with the ongoing coronavirus issue the growing scale of the outbreak poses “significant challenges” to group going forward.
Singapore said both it and subsidiary Silk Air had dramatically reduced frequencies on all Mainland China routes in February and March 2020, while, low-cost offshoot Scoot has suspended all flights to Mainland China until 28 March 2020. “Amidst this challenging environment, the SIA Group will continue to be proactive and nimble in making appropriate network adjustments and managing costs tightly,” the firm said in a statement.
Singapore pointed to ongoing geopolitical uncertainty as likely to drive further volatility in fuel prices but that it has hedged out nearly 79% of its fourth quarter fuel requirements – higher than standard industry practice – in order to provide stability in its fuel costs.
The firm said revenues growth had been drive by a strong transformation programme which has strengthened the group’s revenue generating capabilities and driven operational efficiencies. "At the same time we will continue to pursue ongoing strategic initiatives including the integration of the Singapore Airline Company and SilkAir, while growing the low cost airline Scoot, and investing in the Indian joint-venture Vistara," it said in a statement.
Capacity on SilkAir fell 8.2% on the quarter which the group said was a result of the continued grounding of the airlines six 737MAX airlines and the transfer of routes to Scoot. Overall, the portfolio of airlines in the Group served 137 passenger destinations in 37 countries and territories, including Singapore, as at 31 December 2019.
In its outlook the group that while passenger bookings in future months were closely tracking capacity growth, particularly in premium traffic to major destinations there were still clouds on the horizon, but it was satisfied with the progress made as it is two thirds through its three-year transformation programme.
“Air freight demand has softened amid ongoing trade disputes and uncertain global economic conditions. These headwinds also cloud the outlook for passenger demand over the longer term. The Group will actively capture revenue opportunities and exercise cost discipline to boost profitability in this challenging macroeconomic environment.
Significant progress has been made following two years of transformation efforts. The Group is pushing ahead in its third year of the programme with a continued focus to enhance products and services, to further strengthen revenue-generation capabilities, and to improve operational excellence and staff productivity, underpinned by a strong drive towards digitalisation.”