- SATS (SGX:S58) reported its first quarterly business update after the integration of WFS. In 1QFY24 (Apr to Jun 2023), SATS’s revenue rose 3.2x y-o-y to S$1.2bm, largely driven by the consolidation of contribution from WFS and increase in flights handled.
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- Despite the absence of government relief, operating income turned from a loss of S$4.6m in 4QFY23 to a profit of S$10.2m this quarter. Meanwhile, EBITDA jumped 12x y-o-y to S$179.5m.
- However, SATS incurred one-off integration costs, non-cash provisional amortisation cost and incremental lease accounting expenses for a total of S$29.1m. Consequently, SATS's 1QFY24 PATMI was back to a loss of S$29.9m, compared to a profit of S$5.5m in the previous quarter.
Hopeful for better cargo business as global air cargo shows signs of stabilising
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- Meanwhile, meals served and passengers handled continued to show an uptick in 1QFY24 with q-o-q improvement of 12.9% and 21.5% respectively.
- According to the International Air Transport Association (IATA), in Jun 2023 global air cargo markets showed the smallest y-o-y demand contraction since Feb 2022. IATA remains hopeful that the difficult trading conditions for air cargo will moderate as inflation eases in major markets.
- SATS noted that WFS’ cargo business faced some pressure on volumes, but continued to be supported by more resilient yields and demand arising from contract gains in the US compared to Europe. As cargo enters the seasonal peak period, management is hopeful of better cargo performance in the coming quarters.
- Aviation food recovered to 82% of pre-pandemic levels as at Jun 2023. The recovery momentum of SATS’s aviation food business could see a pick up as airlines gradually restoring to full inflight catering and a potential reduction in double-catering of some airlines.
Accelerating integration of WFS to drive synergies
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