Airfreight revenues for Singapore Airlines Cargo (SIA Cargo) have suffered losses amid challenging market conditions, according to the company’s first quarter results.
The Asian carrier recorded operating profit of 39 million Singapore dollars ($31.3 million), which was 52 per cent down on the same period last year. Key factors for this weak performance are higher levels of competition, increases in fuel prices, and a slow recovery in demand for cargo services.
In total, group revenue fell 4.1 per cent to 3.6 billion Singapore dollars, with the operating profit for the cargo division registering an 18 million loss for the first quarter. This is half the loss it made during the same period last year. The company has attempted to improve its cargo performance through greater focus on matching capacity with demand, it says. But it has continued to find conditions difficult against strong competition in the first half of 2014. This was demonstrated with a slight reduction in its load factor being marginally lower by 0.1 per cent to 62.4 per cent.
A forecast statement from the company explains that it would, “continue to monitor demands closely,” in a difficult operating environment. It read: “The outlook for the air transportation industry has become more challenging with continuing uncertainty in the global economic climate, geopolitical concerns and elevated fuel prices.
“Aggressive fares and capacity injections from competitors will continue to place pressure on yields. Overcapacity in the market will continue to impact the cargo business, notwithstanding a slow recovery in airfreight demand. SIA Cargo is targeting specific product segments and traffic lanes to boost performance.”