Singapore Airlines looks to ride out the storm as profits continue to slide

Singapore Airlines (SIA) has reported another drop in operating profits as the airline group continues to face challenging market conditions in the cargo and long-haul passenger markets. But the group remains in the black and its incredible record of never incurring an annual loss will almost certainly stay intact for at least the foreseeable future.

The SIA Group saw its operating profit drop by 17% to SGD131 million (USD162 million) in its third fiscal quarter ending 31-Dec-2012. SIA has now seen its operating profit drop in seven of the last eight quarters. Pressure on profits will continue in 2013 but the group should be able to continue to eke out small profits.

Over the medium to long term the outlook is brighter as SIA's new strategy, which features a more balanced portfolio with an increased focus on the faster-growing budget and regional markets, beds down. The profitability of SIA's long-haul operation should also get a boost in late 2013 after the carrier eliminates unprofitable non-stop flights to the US. For now it's about battening down the hatches with a focus on cost containment and patiently waiting until all the recent major strategic changes can be fully implemented.