Singapore Airlines (SIA) has been battling strong competition from Asian low-cost carriers and Middle Eastern airlines, which now boast modern fleets and top-quality inflight services. (Shutterstock.com/Santi /Santi Rodriguez)
Singapore Airlines (SIA) on Thursday reported a net loss in the fourth quarter, causing full-year profit to drop by more than half as intense competition continued to buffet the carrier.
SIA has been battling strong competition from Asian low-cost carriers and Middle Eastern airlines, which now boast modern fleets and top-quality inflight services.
It said in a statement that a "wide-ranging review" of the company's network, fleet, products, services, organizational structure, and processes is underway to better position the airline for the future.
The carrier said it suffered a net loss of Sg$138.3 million ($99.4 million) in the fourth quarter to March as operating profit tumbled and the airline made a provision for its cargo business.
For the full-year, net profit came in at Sg$360 million, down 55.2 percent from the previous year, with annual revenue easing 2.4 percent to Sg$14.87 billion.
"Intense competition arising from excess capacity in major markets, alongside geopolitical and economic uncertainty, continue to exert pressure on yields," the company said.
A rebound in jet fuel prices from last year also eroded earnings as the average price for Singapore Jet Kerosene climbed from its low of $37.9 a barrel in January 2016 to $61.9 in March this year, the carrier said.
"The signs were already there that they might register a net loss in the fourth quarter," said aviation analyst Shukor Yusof of Endau Analytics, noting that profits in the previous quarters had been on the decline.
"The size of the loss is quite staggering for the three months and it would indicate that SIA would need to do something drastic and radical to overcome its difficulties in the coming years," he told AFP.
Noting that SIA's budget carriers, Tiger Air and Scoot, had done better than their parent airline, Shukor said this indicates "that the growth for the SIA Group is pretty much now in the low-cost segment of the business".
The carrier needs to figure out how to seek new revenue streams from its premium segment, he said.
"That's the biggest challenge facing management right now," he said.
"The bottom line is that there is intense competition and the market dynamics have changed dramatically for SIA."