Singapore Airlines short to medium term outlook remains bleak as yields and load factors drop again

Singapore Airlines (SIA) has reported improvements in profits for the three months ending 30-Jun-2013 but its short-term outlook remains bleak as yields continue to slip. The group would have incurred a drop in operating profit and revenues were it not for a settlement related to aircraft delivery delays.

SIA is hoping its strategic shift to focus more on the regional and low-cost markets, along with new investment in its long-haul premium product, will drive improvements in profitability over the medium to long-term. But SIA faces challenges on all fronts.

In the long-haul passenger market, competition continues to intensify and market conditions remain unfavourable. Conditions are better regionally within the Asia-Pacific region, but recent capacity increases at SIA and full-service short-haul subsidiary SilkAir have outstripped demand, leading to lower load factors. Long-haul low-cost subsidiary Scoot and short-haul low-cost affiliate Tigerair remain unprofitable. The cargo sector, which has traditionally been an important business for SIA, is also a concern.