February 14, 2020 / 10:22 AM / 6 days ago

Singapore Airlines warns on virus as it posts 11% rise in Q3 profit

FILE PHOTO: An Airbus A380-800 aircraft of Singapore Airlines takes off from Zurich airport, Switzerland October 16, 2019. REUTERS/Arnd Wiegmann/File Photo

SINGAPORE (Reuters) - Singapore Airlines Ltd (SIAL.SI) faces “significant challenges” to its business from the coronavirus outbreak will be adjusting its network and tightly managing costs, it said on Friday, as it reported an 11% rise in third-quarter net profit.

The airline, a benchmark for premium carriers in Asia, said its earnings rose S$31 million to S$315 million in the quarter to Dec. 31 due as revenue reached a record high S$4.47 billion due to a transformation plan that boosted sales.

Looking forward, Singapore Airlines said it had “drastically” reduced flights on all mainland China routes and set up a high-level internal task force to monitor the virus situation and roll out measures to minimise the risk to staff and passengers.

The airline is set for net losses for the next six months as the virus knocks demand, CIMB analyst Raymond Yap forecast last week.

“In short, we believe that the Singapore Airlines group will experience a large drop in travel demand centred on its routes to China (plus Hong Kong and Macau), but also extending to many other parts of its route network,” he said in a note to clients.

Singapore has reported 58 cases of the infection, one of the highest figures outside China.

Qatar on Monday issued a warning to its citizens about travelling to the city state.

Singapore Airlines has already announced sharp cuts to flights to mainland China and Hong Kong. Broker UOB Kay Hian has forecast the carrier’s passenger traffic will fall by 10% in February and March.

Cathay Pacific Airways Ltd (0293.HK), which is even more exposed to the Chinese market, has cut 30% of its global capacity.

Reporting by Jamie Freed; editing by Himani Sarkar and Jason Neely

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