- Singapore carrier says it has strong cash position
- Cathay, Qantas among rivals cutting flights as jet fuel price rises
- Singapore Airlines CEO says Air India investment a 'long game'
SINGAPORE, May 15 (Reuters) - Singapore Airlines will continue to grow its capacity, executives said on Friday, even as some of its biggest rivals like Cathay Pacific and Qantas cut flights due to surging fuel prices caused by the Middle East conflict.
In a results briefing, the Singapore carrier pointed to its strong balance sheet with S$7.9 billion ($6.19 billion) of cash and continued demand for its flights, particularly as passengers seek out alternate hubs to avoid transiting in the Gulf.
"We are in a position where we don't need to cut capacity," Singapore Airlines Chief Commercial Officer Lee Lik Hsin told analysts and reporters. "I cannot comment on the other airlines, but our financial position is strong, and therefore we are actually growing rather than cutting capacity."
The airline said last week it would launch flights from its Singapore hub to Madrid via Barcelona, as well as increase frequencies to Manchester, Milan, Munich and London Gatwick in the latter half of the year.
Even as it adds services, Singapore Airlines has pointed to narrowing margins, saying fare hikes have not been enough to fully offset the rise in the price of jet fuel, the group's single-largest expenditure item.
"We want to price at a point that customers are still willing to buy, so we will have to watch the market carefully," Lee said.
AIR INDIA LOSSES
Singapore Airlines on Thursday reported a 57.4% fall in full-year net profit to S$1.18 billion due to the absence of a S$1.1 billion one-time gain in the year-ago period from the integration of its Vistara joint venture into Air India.
Losses from Air India, in which it owns a 25.1% stake alongside majority shareholder Tata Group, further compounded the profit decline.
Singapore Airlines CEO Goh Choon Phong said on Friday that its investment in Air India would be a "long game", adding that "there is no shortcut".
As for a potential capital injection into Air India, Goh said: "You can expect that it's a discussion that we'll have to have with our fellow shareholders."
DBS analyst Jason Sum said Air India would continue to be a drag on Singapore Airlines' bottom line for the next two to three years as it follows through on its transformation plan.
A key part of that transformation plan also involves an order book of more than 500 new planes, which will require significant external funding from Singapore Airlines, given that Air India is still making losses, he added.
"SIA really does have one of the strongest balance sheets in the industry...so they can definitely afford to take on more debt to help inject more capital into Air India as well," he said, although he added that it is quite difficult to give an estimate for how much capital would be required.
"It's likely that Air India might have to push back some aircraft deliveries as well, so they really have to pace out aircraft deliveries...at a tempo that is more manageable for the group," he said.
($1 = 1.2769 Singapore dollars)
Reporting by Jun Yuan Yong; Editing by Jamie Freed
Source: Reuters