Asian carriers brace for more rough weather

Asia’s leading airlines are bracing themselves for more rough weather after earnings nosedived in the first quarter with no signs of a global economic recovery in sight, industry analysts said. Compounding the airlines’ woes are the outbreak of swine flu and growing popularity and longer reach of budget airlines in the region, they said.

Singapore Airlines (SIA), the latest Asian carrier to release its results, said net profit in its fourth quarter ending March tumbled 92 percent on the year to 41.9 million Singapore dollars (28.5 million US). During the quarter, revenues sank an annual 19.1 percent to 3.32 billion dollars while in the fiscal year to March, net profit fell 48.20 percent to 1.06 billion dollars, SIA said.

SIA chief executive Chew Choon Seng said the air travel slump appeared to have levelled off but there was still no evidence to suggest that the situation was starting to improve.”So we are seeing a flattening out,” he said, but added that while the situation was more encouraging, a real recovery “is still not visible yet”.

SIA earns about 40 percent of its revenues from premium traffic, or business and first-class travel, and it has been hit hard by the drop in corporate travel, along with Cathay Pacific of Hong Kong and Australia’s Qantas.

All three airlines have announced measures to contain costs such as unpaid leave and reducing capacity but there is only so much that they can do on the expenditure front, analysts said.” I don’t see anything at the moment that can help the airlines... They are doing everything they can to cut their costs,” said Jim Eckes, managing director of the Hong Kong-based consultancy Indoswiss Aviation.”

They will need an economic recovery which so far we just don’t see.” Premium traffic has declined on average 30-40 percent from a year ago, said Eckes.”Nobody is flying these days in first class or business class.

The high-yield business has disappeared,” he said.

AFP