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Despite 5% increase in profit for Q3, SIA faces cost challenges due to fuel costs

Singapore Airlines Ltd. (SIA) has reported a 5% increase in third-quarter profits, reaching SGD 659 million (USD 490 million) compared to the same period last year. The airline also witnessed a 5% surge in revenue for the quarter ending December 31, hitting an all-time quarterly high of SGD 5.1 billion. However, net fuel costs after hedging experienced a notable 9.1% increase.

Despite the positive news of robust ticket sales and a sustained demand for air travel, Singapore Airlines is cautioning about challenges in passenger yields – a key revenue indicator – due to intensified competition. The airline is also expressing concerns about potential impacts from geopolitical and economic uncertainties, which have the potential to influence business sentiment and air travel demand.

In the first nine months of the financial year, Singapore Airlines experienced a significant climb in net income by 35%, reaching SGD 2.1 billion on revenue of SGD 14.2 billion – both reaching all-time highs. The airline has already matched the profit it made in the entire previous fiscal year, indicating a trajectory towards new record highs.

Highlighting its positive performance, Singapore Airlines noted that monthly capacity rebounded to 93% of pre-Covid levels by December. The load factor, indicating how busy its planes are, remained close to 90%. This allowed the airline to outpace its regional rival, Cathay Pacific Airways Ltd., which has faced challenges due to pilot shortages in recent months.

While the continued strength in travel demand is expected to support Singapore Airlines’ earnings in the current quarter, uncertainties loom over the outlook for fuel costs. Asian jet fuel prices have risen since the start of the year due to shipping disruptions in the Red Sea and tighter supplies. However, there is an expectation that oil prices will maintain moderate levels throughout the year.

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