Major airlines’ earnings fall as industry faces fresh turbulence
The recent revelations that aviation giants Singapore Airlines and Emirates have suffered big declines in earnings appear to be signs of a new period of turbulence three years after the global financial crisis. The two companies are well regarded as two of the industry’s best-managed airlines, but both said that ongoing high oil prices and uncertainty over the world’s economy are pulling down profits. “The global economic volatility over the last quarter has created heartburn for the global airline industry,” business consultant Jonathan Galaviz comments.
Singapore Airlines’ net profit in the six months to September fell 62% to $188 million. Emirates posted a 76% fall in net profits for the first half of its financial year to $225 million. SIA said in a statement: “Advance passenger bookings are showing signs of weakness, particularly in Europe and the United States. Forward prices for jet fuel remain high and volatile.”
“We are looking at severe erosion in not just premium (business and first-class) seats but at the back of the aircraft,” Shukor Yusof, a Standard & Poor’s aviation analyst, says.
[pictured: Boeing B777-200 in Singapore Airlines livery; courtesy Singapore Airlines]