Singapore Airlines - DBS Research 2024-02-22: Dual Turbulence - Navigating Pricing & Cost Pressures

• 3QFY24 was a significant miss. Singapore Airlines (SIA) reported 3QFY24 headline net profit of S$659m (-6.8% q-o-q, +4.9% y-o-y). The sequential decline in net profits for the quarter was unexpected, given the reduction in jet fuel prices and the fact that the Oct-Dec quarter is a peak season for both travel and cargo.
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• SIA's 9MFY24 core net profit of S$2016m to S$2066m accounted for about 76% of the consensus and DBS’s full-year estimate.

3QFY24 revenue was S$5,082m (+8.5% q-o-q and +4.9% y-o-y), setting a record for SIA's quarterly revenue.

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• Group passenger traffic grew by 3.6% q-o-q and 19.1% y-o-y to approximately 95% of 2019’s level in 3QFY24 (up from 80% in 3QFY23), with overall passenger load factors remaining at an elevated level of 88.2%. Passenger yields for both SIA and Scoot declined more rapidly than anticipated (SIA: -4.6% y-o-y, Scoot: -15.3% y-o-y).
• Meanwhile, the cargo segment saw a slight increase in volumes (+5.0% q-o-q, +3.9% y-o-y) due to robust e-commerce demand, though cargo yields demonstrated limited improvement (+2.5% q-o-q) on a sequential basis.

The sequential decline in the group’s operating profits and margins in a seasonally stronger quarter is concerning.

• Read more at SGinvestors.io.

Jason SUM CFA DBS Group Research | Tabitha FOO DBS Research | Paul YONG CFA DBS Research | https://www.dbs.com/insightsdirect/ 2024-02-22 SGinvestors.io

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