SIA posts 48% drop in annual profit

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Singapore Airlinesposted a 48% decline in net profit for the fiscal year due in part to a weak fourth quarter.

The Star Alliance carrier says in a statement that in the 12 months ending 31 March its net profit fell 48% to S$1.06 billion ($723 million) from S$2.05 billion.

Revenue for the year rose slightly to S$16 billion from S$15.97 billion but expenditure rose 9% to S$15.09 billion from S$13.85 billion, it says.

In the fourth quarter the airline made an operating loss of S$28 million but changes in taxes meant it made a net profit in the quarter of S$42 million. This compares to a net profit of S$528 million for the corresponding quarter the year before.

The carrier reduced its expenditure in the fourth quarter by 8% to S$3.35 billion from S$3.64 billion but this was insufficient to counter the 19% drop in revenue to S$3.32 billion from S$4.11 billion.

A break-down of the annual results shows SIA Cargo made an operating loss of S$245 million compared to an operating profit of S$132 million the year before.

SIA's ground services firm SATS made an operating profit of S$171 million, down 2%; SIA Engineering had an operating profit of S$113 million, up 9%; and SilkAir made S$34 million, down 16%.

In its outlook, SIA says "advance bookings indicate that the drop in demand for air travel is levelling out."

"However, the probability of a sustained recovery has been set back by the uncertainty arising from the influenza A epidemic."

"In the near term, promotional pricing and reduced business travel will keep revenue under pressure."

SIA says it has been responding to the downturn by reducing capacity and working with employees to boost productivity and better manage its surplus resources.

The carrier recently reached an agreement with its unions for staff to go on compulsory leave.