2011/01/28

Antitrust fines hit Singapore Airlines profit

SINGAPORE, January 28, 2011 (AFP) - Antitrust fines imposed by the United States, European Union and South Korea dented Singapore Airlines' third-quarter net profit, which fell 29 percent, the carrier said Friday.

Soaring jet fuel prices also dampened earnings, it said.

Net profit in the October-December quarter was Sg$288.3 million ($225.30 million), down from Sg$403.7 million a year earlier, SIA said in a statement.

Revenues rose 12 percent to Sg$3.84 billion dollars.

SIA said it had set aside Sg$199 million during the quarter for the hefty antitrust fines imposed by the United States, the European Union and South Korea on its subsidiary SIA Cargo.

SIA Cargo was punished for its part in a cartel involving several international carriers which reportedly engaged in price-fixing.

SIA Cargo was fined $48 million by the United States, 74.8 million euros by the European Commission and 3.l billion won ($2.78 million) by the South Korean Fair Trade Commission.

The airline said while it had accepted the US fine under a plea offer made by the US Department of Justice, it had filed appeals against the fines imposed by the European Commission and the South Korean Fair Trade Commission.

Jet fuel prices, which are at two-year highs, also crimped earnings as fuel remains the company's biggest expense, SIA said.

Shukor Yusof, an aviation analyst with Standard and Poor's Equity Research, said SIA turned in a stellar performance despite the fines.

"It's another respectable performance by SIA, all things being equal," he told AFP, adding that net profit of Sg$288 million was something "most other airlines would die for."

SIA said advance passenger bookings for its final financial quarter ending March were tapering off.

"As airlines including SIA continue to inject capacity, advance passenger bookings for the final quarter of the 2010-2011 financial year are levelling off," it said.

For air cargo, the Asia-Pacific region will continue to lead due to uncertainties in European markets.

"Growth for airfreight is expected to continue for the rest of the financial year, albeit at a slower rate," the airline said.

SIA shares closed unchanged at Sg$15.04 Friday before the earnings report was released.