Singapore Airlines Ltd. announced its first quarterly net loss in six years as the global economic slowdown and the outbreak of H1N1 influenza crimped passenger and cargo demand.
SIA reported a net loss of 307.1 million Singapore dollars (US$212.2 million) for the three months ended June 30 compared with a net profit of S$358.6 million a year earlier.
The airline warned that it could post its first-ever annual loss if conditions didn’t improve. It also said salaries for its 12,000 staff based in Singapore would be cut by 10% for at least three months starting Aug. 1.
“The 10% pay cut involves non-managerial staff based in Singapore,” spokesman Nicholas Ionides said. “Managerial staff have already taken pay cuts ranging from 10% to 20%.”
SIA, seen by industry watchers as one of the world’s best-managed carriers, last reported a quarterly loss in 2003 when the SARS outbreak wrecked havoc in air travel across Asia.
Revenue in the first quarter fell 31% to S$2.87 billion from S$4.13 billion a year ago and the airline suffered a fuel hedging loss of S$287 million compared with a gain of S$349 million year earlier.
SIA said that although the price of jet fuel has fallen more than half from its peak of last year, prices remain volatile.
“However, losses from hedges, which were contracted when fuel prices were at historical highs, will taper off over the course of the financial year as these hedges are settled,” the airline said.
SIA has been hit hard by the economic downturn as business travel has been cut substantially around the world. The carrier makes about 60% of its profit from business and first-class passengers.
SIA said it carried 3.81 million passengers in the first quarter, down 20% from the same time last year, and the overall load factor that includes passengers and cargo was down three percentage points from a year earlier to 64.6%.
The airline said it had S$4.4 billion in cash at the end of the first quarter, down 28% from S$6.1 billion a year earlier, adding it doesn’t see any need to raise capital.
The earnings numbers reflect the performance of the Singapore Airlines group which includes the carrier, an engineering unit, the cargo unit and a smaller airline, Silk Air. — WSJ