Feb 21 2024: A cautionary statement from Singapore Airlines regarding the downward pressure on ticket prices and escalating costs led to a notable slump of nearly 10% in its shares on Wednesday, overshadowing the Singapore Airshow. This significant decline, the most substantial since the onset of the COVID-19 pandemic in March 2020, followed disappointing earnings for the December quarter, exacerbating concerns within the aviation industry. The company’s earnings miss reflects broader worries about supply chain limitations and a cautious outlook, particularly in Asia where China’s travel recovery lags behind other regions. Amidst efforts by aircraft manufacturers like Airbus, Boeing, and China’s COMAC to finalize purchase agreements at the airshow, Singapore Airlines highlighted challenges stemming from high fuel costs, inflationary pressures, and supply chain disruptions confronting airlines globally. The airline noted continued pressure on passenger yields due to heightened competition as the industry gradually restores capacity. Despite recording robust net profits, Singapore Airlines has experienced consecutive quarterly declines since achieving a peak in the June quarter of the previous year, fueled by strong post-pandemic summer travel demand. The company’s warning echoes Air New Zealand’s recent announcement, which cited engine maintenance issues, economic risks, softening domestic demand, and stiff competition on U.S. routes as factors contributing to weaker-than-expected results. With U.S.-China flight capacity still substantially below pre-pandemic levels, tensions between governments further impede the restoration of services, prompting U.S. carriers to redirect long-haul flights to Australia and New Zealand, consequently affecting fares in those markets. Additionally, airlines face operational disruptions due to the necessity of grounding certain aircraft for engine inspections, particularly concerning components of Pratt & Whitney’s GTF engines. Cebu Pacific, a Philippine low-cost carrier, disclosed that it currently has ten Airbus A320neo family planes undergoing inspections, while Air New Zealand estimated inspection-related expenses of NZ$35 million for the current half-year period, encompassing costs for short-term leased aircraft and additional resources to address customer concerns.
Warning from Singapore Airlines Dims Prospects for Air Show
Related Posts
Add A Comment