SINGAPORE — Flag carrier Singapore Airlines on Thursday (Nov 3) reported net profit plunged 69.6 per cent in its fiscal second quarter from the corresponding period a year earlier, hurt by a sluggish global economy as well as lower dividends from long-term investments.

For the three months ended Sept 30, net profit fell to S$64.9 million from S$213.6 million a year earlier as revenue slipped 5.1 per cent to S$3.65 billion, SIA said in an afterhours filing with the Singapore Exchange. It reported a 15.5 per cent year-on-year fall in operating profit for the period to S$109 million, due to excess capacity and aggressive competition.

On top of the weaker operating results, returns from long-term investments during the period slumped by S$88 million mainly in the absence of a special dividend previously enjoyed, while medium-to-long-haul low-cost subsidiary Scoot suffered an impairment of S$21 million on its 777-200 aircraft and associated companies reported weaker results.

The flagship full-service parent airline SIA contributed S$79 million in operating profit for the three months to Sept 30, down from S$98 million in the year-ago period, while regional unit Silkair accounted for S$17 million, down from S$21 million previously. Scoot and short-haul budget unit Tiger Airways reported gains of S$5 million and S$3 million, respectively, turning around from losses of S$2 million and S$10 million in the previous corresponding period.

The freight business continued to languish amid a global capacity glut, with SIA Cargo reporting an operating loss of S$11 million, widening from the S$3 million loss previously. SIA Engineering reported an operating profit of S$25 million, narrowing from S$27 million previously.

“Most companies in the group recorded weaker operating results amid a sluggish global economy. However, Scoot and Tiger Airways registered improvements year-on-year as the low-cost carriers continued to perform better on the back of an extended network and reduced operating expenditure,” SIA said in its filing.

Looking ahead, SIA warned of more headwinds to its operations.

“The passenger airline business continues to be impacted by geopolitical uncertainty and weak global economic conditions. The outlook in most major economies remains tepid. Furthermore, excess capacity and aggressive pricing continue to persist in the market, exerting pressure on loads and yields,” it said.

“The outlook for the cargo business remains challenging as yields are expected to stay under pressure due to overcapacity in the air cargo industry. Efforts will continue to be focused on higher-yielding product segments to improve the overall traffic mix,” it added.

Fuel prices remain volatile given the uncertainty over how the proposed cut in oil production by the Organisation of Petroleum Exporting Countries would be implemented, it warned.yes

“For the second half of the financial year, the group has hedged 29.3 per cent of its jet fuel requirement in Singapore jet kerosene and 3 per cent in Brent at weighted average prices of US$68 and US$63 per barrel, respectively,” it said.

SIA proposed a 9 cents per share dividend for the period, down 1 cent from the year-ago period

Before the aftermarket announcement, SIA shares fell 0.2 per cent to S$10.11 each, in line with the 0.2 per cent loss in the benchmark Straits Times Index (STI) to 2,802.08. SIA shares have shed 9.7 per cent in the year to date, compared to the 2.8 per cent decline in the STI.