Singapore Airlines Ltd, Asia's biggest carrier by market value, had a fiscal first-quarter profit -- compared with its first loss a year earlier -- as passenger and cargo loads rose and the company made money on foreign exchange.
Net income in the three months ended June 30 was 259 million Singapore dollars (US$151 million), or S$0.21 a share, from a loss of S$312 million, or S$0.26 a share, a year earlier. Sales rose to S$2.72 billion.
Singapore Airlines is attracting more passengers as tourists and business travelers returned to the Southeast Asian region after the SARS outbreak emptied flights last year.
The Singapore economy's 9.1 percent growth in the quarter that ended in June also helped.
Airlines may break even on international routes and their traffic may rise by more than 10 percent this year, exceeding earlier forecasts, as economic growth accelerates, the International Air Transport Association said this week.
Singapore's June tourist arrivals more than doubled year on year to 686,597, boosted by travelers from Indonesia, China and India, according a statement from the Singapore Tourism Board.
Still, the record prices of jet fuel and the increased competition from budget carriers in the region could slow down the pace of recovery of Singapore Airlines, said Mark Tan, an analyst at UOB Asset Management Ltd in Singapore, which manages S$10 billion in assets.
"Fuel is definitely a medium-term issue while competition from low-cost carriers will become a major issue in the future," Tan said.
Crude oil futures rose to their highest in more than two decades of New York trading on concern that supply from the world's top producers will be disrupted.
Fuel normally accounts for about one-fifth of the airline's costs, analysts such as Tan said.
Singapore Airlines will face challenges from budding discount carriers such as Thai AirAsia and others.
"Competition will intensify on some Southeast Asian routes and yields will come under pressure," the airline said in the statement.
To compete, Singapore Airlines is seeking to expand its number of destinations and boost frequency to existing cities.
The airline plans to raise frequency to cities such as Melbourne, Brisbane, Beijing, Guangzhou and Hanoi. The airline will start a new service to Amritsar in northern India, the statement said.
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