Surprise SIA Results Could Signal Start of Asian Rebound
Airlines in the Asia-Pacific region facing the prospect of a slow return to profitability during 2010 might have taken some encouragement from better-than-expected results for the third quarter of the current financial year announced by Singapore Airlines (SIA) on February 4. The flag carrier’s operating profit for its third fiscal quarter, which ended on December 31, totaled S$323 million, marking a major turnaround after the S$159 million loss suffered in the second quarter. Group revenues in the third quarter climbed by almost 11 percent over the second quarter to reach S$34.4 billion. During the third quarter, SIA cut costs by S$169 million, spending 5 percent less than in the previous three-month period.
SIA, which has always prided itself on its record as one of the industry’s most consistently profitable airlines, has faced a battle to reverse heavy losses it has incurred over the past year from unfavorable hedging on fuel prices and from the hit it took from the dramatic dip in demand for cargo flights. Some observers criticized SIA for being too slow to react to the downturn. Unlike many other carriers, which grounded significant parts of their cargo fleet, for instance, SIA removed only one Boeing 747 from service.
Meanwhile, speaking at Aviation Leadership Summit at the biennial Singapore Airshow (February 14 to 19), IATA director general Giovanni Bisignani demanded that airports, air-traffic-control agencies and other service providers cut the charges they impose on airlines as they struggle to repair their balance sheets. Speaking at the same event, Singapore transport minister Raymond Lim said the Association of Southeast Asian Nations is expected to complete an open skies air transport liberalization pact with China later this year.