Singapore Airlines, the world’s second-largest airline by market value, yesterday said a recovery in passenger and freight traffic should be sustained in the near term after posting a better-than-expected first quarter profit.
Global airlines are recovering from the worst downturn in aviation history, but some analysts doubt if the rebound can be sustained with the Eurozone debt crisis threatening demand for more expensive long-haul flights.
Singapore Airlines said: “Advance bookings indicate that the year-on-year recovery in passenger carriage and yields evident in the quarter to June will hold up for the rest of 2010.”
It added: “Similarly, leading indicators… suggest that recent resurgence in air freight may
be sustained in the near-term, although the rate of growth may abate.”
The International Air Transport Association said this month global airlines will turn a
$2.5bn (£1.6bn) profit this year, swinging from the heavy $2.8bn loss the industry group forecast three months ago.
The recovery was harmed when a volcanic eruption in Iceland caused havoc in air travel earlier this year.
Singapore Airlines, whose competitors include Australia’s Qantas and Hong Kong-listed Cathay Pacific, racked up costs of S$50m (£23.7m) as a result of the disruption.
Singapore Air’s passenger yield improved to 11.7 Singapore cents per passenger kilometer from 10.2 Singapore cents a year ago.
Analysts said fuel costs and the stability of demand for European traffic, a key profit area for Singapore Airlines, would be the main issue that investors would need to monitor for the rest of this year.
Singapore’s flag carrier posted an April-June net profit of S$253m, beating analysts’ forecasts of S$232m and compared with a S$307m loss a year ago when the airline recorded its first quarterly loss in six years.