Singapore Airlines (SIA) reported yesterday (May 16) that its profit for the 2018/19 fiscal year plunged by a whopping 47.5 per cent to S$683 million from last year’s S$1.3 billion. This is despite the fact that the group achieved its highest annual revenue to date.
SIA cited “transformative initiatives” as contributing factors to its annual revenue, explaining that its hefty profit drop was caused by an increase in fuel prices.
The rise in fuel prices also impacted SIA’s expenditure. Group expenditure grew by 7 per cent to S$15.3 billion, with higher net fuel costs contributing to a sizeable two-thirds of the increase. The group’s fuel expenditure went up by 17.6 per cent, or S$688 million as nett fuel prices rose by over 21.6 per cent per barrel last year.
SIA and other companies within the group, SilkAir and SIA Engineering, recorded an operating profit of S$991 million, S$15 million and S$57 million, respectively.
Another SIA group airline Scoot swung from profit to loss, recording an operating loss of S$15 million, compared to an operating profit of S$78 million last year. SIA attributed Scoot’s S$93 million decline to the cost of expansion outweighing revenue growth.
Identifying the slowdown in the rate of growth of Chinese travellers as a contributing factor to Scoot’s poor performance, SIA said that while Scoot showed growth in passenger traffic (14.6%) and growth of capacity (15.1%), this was not enough to counter the high costs of expansion and fuel.
Further, “unusual levels of operational disruptions, largely relating to 787 engine issues” also impacted Scoot’s performance.
The report on SIA Group’s financial performance, which can be seen here showed that SIA’s Board of Directors recommended a final dividend of 22 cents per share for the fiscal year of 2018/19.
The interim dividend of 8 cent per share paid on 1 December 2018 brings the total dividend for the 2018/19 fiscal year to 30 cents per share. Shareholders will be paid in August.