FUEL INCREASE & AVIATION

Singapore Airlines Q4 profit slammed by fuel costs

Soaring oil prices pushed Singapore Airlines’ fourth-quarter net profit sharply lower and the carrier warned of uncertainties ahead as the global economic recovery sputters and Japan recovers from the effects of a devastating earthquake.

Net profit for the three months ended March 31 was down 38.5 percent at US$137.94 million compared with $224 million a year earlier. Earnings were significantly lower than the $235.5 million average forecast in a Dow Jones Newswires poll of five analysts.

Group revenue rose eight percent year-on-year to $2.9 billion but was outpaced by an 11 percent rise in expenditure, the airline said, adding fuel costs rose to $1 billion in the fourth quarter this year from $803.82 million in the same quarter a year earlier.

The average price of jet fuel, which accounts for a third of the airline's costs, surged by more than 25 percent between January and April this year to $140 per barrel, the highest level since the last peak at $174 per barrel recorded in July 2008, it said.

"While there has been some respite in the past week, jet fuel prices are likely to remain high and volatile in the near term," the airline said.

For the full fiscal year, the airline reported nearly a five-fold increase in net profit to $879.24 million from $174.24 million in the year that ended March 2010, when the global financial crisis roiled the international aviation industry.

"The twin challenges of near term weakness in load factors and high fuel prices will adversely affect operating performance of airlines. The company remains committed to staying lean and competitive. The company will be vigilant in cost management and closely monitor patterns of demand and adjust capacity accordingly," Singapore Airlines said in the statement.

During the January-March quarter, Singapore Airlines decommissioned one B747-400 aircraft. As at 31 March 2011, its operating fleet comprised 108 passenger aircraft with an average age of six years and three months, the company said in the statement.

In the new fiscal year, the company expects to take delivery of eight Airbus A380-800 aircraft and decommission five Boeing B777s and all seven of its B747-400s, bringing down its operating fleet to 104 aircraft by March 2012.

"The reduction in fleet size will be more than offset by increased utilisation to produce passenger capacity growth of six percent in available seat-kilometres for the 2011-12 financial year," it said.

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Oil costs push Turkish Airlines into red

Turkish Airlines , Turkey's flag carrier, posted a first-quarter net loss of US$209 million, steeper than expected, after it was stung by higher oil prices, reported Reuters.

It had been forecast to post a loss of $164.61 million, according to the consensus forecast in a Reuters poll, and after net profit of $75.86 million in the first quarter of 2010.

Analysts have said the carrier, which is expanding at a rapid pace, is seeing its expenses rise much faster than capacity.

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Thai Airways Q1 profit plunges by 94%

Thai Airways International first-quarter net profit plunged 94 percent from a year earlier, due mainly to a foreign-exchange loss, reported Dow Jones Newswires.

For the three months ended March 31, the national carrier reported a net profit of US$20.4 million, down from $349.67 million a year earlier.

Thai Airways booked a $111.15 million foreign-exchange loss compared with a $118.56 million foreign exchange gain recorded in the first quarter of last year. The carrier recorded a foreign-exchange loss in the quarter because the baht weakened against the euro, which is the main denomination of the firm's foreign debt.

The national carrier's expenses, which rose 7.5 percent year-on-year to $1.58 billion, was also a cause of the sharp decline in its first-quarter net profit, it said.

"The major factor causing a dramatic increase in cost is the rapid rise in average jet fuel price, which was 33.5 percent higher than the first quarter last year," the company said.

It said Japan's recent massive quake also took a toll on the company's earnings.