SIA falls most in 14 months on fares

SINGAPORE – Singapore Airlines, Asia’s second-biggest carrier by market value, dropped the most in more than 14 months today (Thursday) on concerns that ticket prices may be under more pressure amid growing competition, the Bloomberg news agency reported.

SIA fell 2.5 per cent, the biggest decline since May last year, to close at S$10.33. The stock was the worst performer among 30 companies in the Straits Times Index today (July 31).

Aggressive fares and capacity injections from competitors will continue to pressure yields, a measure of ticket prices, the company said yesterday. SIA’s first-quarter profit dropped 71 per cent because of lower fares and bigger losses from affiliates including Tiger Airways Holdings.

“The guidance suggests a challenging passenger yield environment, especially given continued competition from the Middle Eastern airlines,” HSBC Holdings said in a report today, downgrading SIA’s stock to neutral, or hold, from overweight, or buy. “Until SIA can start to show a sustainable earnings recovery, we believe there are limited near-term share price drivers.”

Net income in the three months ended June fell to S$34.8 million from S$121.8 million a year earlier, the airline reported yesterday. Sales dropped 4.1 per cent to S$3.68 billion.