Singapore Airlines posts record annual profit, flags challenging macro

Singapore Airlines C6L on Wednesday posted a record annual profit and raised its dividend, reflecting strong travel demand in North Asia, but flagged geopolitical woes, supply chain snags and fierce competition as challenges facing the sector.

The city-state's flag carrier also highlighted strength in cargo demand towards the end of the financial year amid a shift to air freight by various shippers due to security concerns in the Red Sea region.

"Cargo demand strengthened towards the end of FY2023/24 on the back of healthy e-commerce demand, resilient and growing segments such as perishables and concerts," the company said.

Singapore Airlines said the demand for air travel remained "healthy" in the first quarter of fiscal 2024-2025 on the back of a pick up in forward bookings in North and South East Asia.

The carrier reported annual net profit of S$2.68 billion ($1.99 billion) for the fiscal ended March 2024, compared with S$2.16 billion a year ago.

It also declared a final dividend of 38 Singapore cents apiece, higher than the 28 Singapore cents a year ago.

Singapore Airlines, however, expects passenger yields — a measure of average fare paid per mile, per passenger — to continue to moderate as airlines expand capacity, especially in the Asia-Pacific region.

"The airline industry continues to face challenges including rising geopolitical tensions, an uncertain macroeconomic climate, supply chain constraints and high inflation in many parts of the world," it said.

SIAL said it intends to redeem all remaining zero-coupon mandatory convertible bonds (MCBs) that it issued in June 2021 to support its balance sheet amid an almost total shutdown of air travel during the pandemic.

The latest redemption, to be paid to eligible bondholders on June 24, will see SIAL meet the accreted principal amount payable of S$1.74 billion.

($1 = 1.3466 Singapore dollars)