Challenging environment could present headwinds for SIA amid recovery

SINGAPORE Airlines (SIA) booked earnings that were in line with expectations for FY19, but a challenging operating environment could create some headwinds in the quarters ahead.

For the full year ended 31 March 2019, SIA's net profit sank 47.5 per cent to S$682.7 million, weighed down by costlier fuel and share of losses from Virgin Australia's non-cash accounting adjustments. Revenue edged up 3.3 per cent to a record S$16.32 billion.

But with the escalation in tariff rates for US-China trade, coupled with a global slowdown in GDP growth, weakness is likely to continue for air freight for the rest of the year, CGS-CIMB analysts Raymond Yap and Calyne Ti said. Demand for business travel - a significant revenue contributor - could also take a hit.