Singapore Airlines cautions over aviation challenges despite record profit

Geopolitical tensions, macroeconomic uncertainties, inflationary pressures, and supply chain constraints pose challenges for the aviation industry, Singapore Airlines has warned.

The caution came despite the airline reporting a record annual profit as high travel demand drove heightened passenger revenue and load factors.

Carryings grew by more than 37% year-on-year to a combined 36.4 million passengers for SIA and its Scoot subsidiary.

“The demand for air travel remained buoyant throughout FY2023-24, boosted by a rebound in North Asia as China, Hong Kong, Japan and Taiwan fully reopened their borders,” the company said.

Group revenue was up by 7% to a record S$19 billion, resulting in a net profit rising 24% to S$2.6 billion ($1.99 billion). Group passenger load factor improved 2.6 percentage points to a record 88%.

SIA said: “The demand for air travel remains healthy in the first quarter of FY2024-25, supported by a strong pick up in forward bookings to North Asia and South East Asia.

“Passenger yields will likely continue to moderate due to increased capacity injection by airlines, especially in the Asia-Pacific region.

“The group will closely monitor market conditions and adjust our network as necessary in line with demand patterns.

“The airline industry continues to face challenges including rising geopolitical tensions, an uncertain macroeconomic climate, supply chain constraints and high inflation in many parts of the world.”

The group hopes to expand its reach after Singapore’s Competition and Consumer Commission approved a proposed merger of Air India and Vistara.

The deal is still subject to foreign direct investment and other regulatory approvals.

Once completed, it will give SIA a 25.1% stake in an enlarged Air India Group with a “significant presence” in all key Indian airline market segments, including domestic, international, full-service and low-cost.

“This will strengthen SIA’s multi-hub strategy, and allow the group to continue participating directly in this large and fast-growing aviation market,” a statement said.