Singapore Airlines has placed the blame for a sharp fall in its first quarter financial performance on rocketing fuel costs. The carrier saw an 82% drop in net profit to S$45 million ($37.3 million) compared to S$253 million in the same quarter a year ago.
Average jet fuel prices jumped 46% year-on-year, said the carrier, which even a considerably improved hedging performance could not overcome.
The operator said that, while Group revenue grew 3% to S$3.57 billion, expenditure increased by 11% to S$3.56 billion, giving an operating profit of just S$11 million, compared to S$251 million operating profit last time.
Breaking the figures down by division, the parent airline company turned in an operating loss of S$36 million in the first quarter, in contrast to an operating profit of S$136 million a year previously. SIA Engineering recorded an operating profit of S$35 million (2010: $36 million), regional subsidiary SilkAir made an operating profit of S$21 million (2010: S$15 million), while SIA Cargo produced an operating loss of S$14 million (2010: S$60 million profit)
Looking forward, the airline said that fuel costs now accounted for more than 40% of total Group expenditure and, with predicted fuel prices remaining both high and volatile, "high fuel cost will remain the biggest challenge for the Group in the coming months".
This was particularly so given "almost flat" advance bookings over the next few months compared to the same period last year: "With the current economic uncertainties, significant challenges remain in the key markets of Europe and the United States," it warned.