Singapore Air sees trade woes hurting demand in cautious outlook
By Danny Lee and Audrey Wan
(Bloomberg) – Singapore Airlines warned tariff and trade tensions on top of broader economic and geopolitical uncertainties could hurt demand for passenger and cargo flights.
The city-state flag carrier's cautious outlook emerged despite full-year profit beating estimates and revenue rising to a record as strong travel demand countered intensifying pressure from competitors and geopolitical headwinds.
'The global airline industry faces a challenging operating environment,' the airline said in a statement. The growing challenges 'may impact consumer and business confidence, potentially affecting both passenger and cargo markets,' adding it remained vigilant to adapt to changing market conditions.
Net income rose 3.9% to S$2.78 billion ($2.1 billion) in the year ended March 31, higher than analyst estimates for S$2.4 billion. Revenue edged 2.8% higher to a record S$19.5 billion, topping expectations for S$19.3 billion.
Singapore Air's muted final quarter underscores the uncertainty hanging over the carrier for the year ahead. While the airline had been confident about robust travel demand, US President Donald Trump's ever-changing policies have hurt consumer sentiment and upended global trade flows.
The airline's passenger yield – a key metric of profitability – declined slower than in the previous three years, falling 5.5% to 10.3 Singaporean cents per kilometre. Expenses, including fuel costs, rose.
Singapore Air's caution stopped short of any concrete financial impact. That contrasts with major US airlines like American Airlines Group Inc. and Delta Air Lines, which withdrew their full-year guidance, while United Airlines took the unusual step of offering two forecasts factoring in a scenario with and without a tariff impact. Europe's largest carrier, Deutsche Lufthansa, had warned last month it had limited earnings visibility amid the trade tensions.
Singapore Airlines Group, which includes budget unit Scoot, carried a record 39.4 million passengers in the fiscal period. The carrier also has a 25.1% stake in Tata Group-run Air India. The city-state's flag carrier has entered deals to jointly operate flights and coordinate schedules and airfares on routes between Singapore and the likes of Indonesia, Japan, Germany and Malaysia with rival carriers to shore up its competitive defences.
Net income was boosted by a one-off non-cash gain of S$1.1 billion booked in the third quarter. Stripping out the one-off item, adjusted net income fell 37% to S$1.7 billion.
Shares in Singapore Air closed 0.3% higher in Singapore Thursday. That takes its year-to-date gains to 6.8%.
More stories like this are available on bloomberg.com
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