WITH GLOBAL ECONOMIC growth expected to level off and inflation a mounting concern, Singapore Airlines appears to be facing potential headwinds that could disrupt its flight to recovery in the coming quarters.

The full-service carrier reported a disappointing set of third quarter results after the market closed on Jan 28, falling short of the average profit estimates of analysts tracked by Bloomberg. For the three months ending Dec 31, SIA posted a 29% y-o-y fall in net income to $288.3 million, after it booked charges of as much as $199 million relating to antitrust cargo fines.

While the carrier accepted the plea offer made by the United States’ Justice Department in November, it is currently appealing fines imposed by the European Commission and the South Korean Fair Trade Commission and plans to contest the charges, it said in today’s statement to the Singapore Exchange.

 

Spending on fuel -- SIA’s biggest expense -- also rose 8% to $1.11 billion in the same period. Earlier on Jan 21, the airline had announced an increase in fuel surcharges for tickets issued from Jan 27.

 

While the carrier has so far been able to offset higher costs by increasing the prices of tickets, the adjustments “will offer only partial relief of higher operating costs arising from recent increases in the price of jet fuel,” SIA said, suggesting that yields could face future pressure in the low growth and high inflation environment expected going forward. Passenger yield, a measure of the average price a traveller pays to fly one kilometre, was 12.1 cents in the quarter compared with 10.5 cents a year earlier.