Singapore Airlines (SIA) - Maybank Research 2024-08-01: A Slow Take-Off; Soft 1QFY25 Earnings

• SIA (SGX:C6L)'s 1QFY25 net profit of S$452m (-38.4% y-o-y, -21.4% q-o-q) missed our and market expectation at almost 23%/22% of MIBG/consensus’ full year estimates.
• Operating profit fell 37.7% y-o-y (-16.7% q-o-q) to S$470m, due to lower pax/cargo yields and increase in net fuel cost on higher volumes uplifted and an 8.1% rise in fuel prices. See SIA's announcements.

Keener competition for passenger air travel

• - Read this at SGinvestors.io -
• Amid intensified competition, SIA is now focused on sustaining a healthy passenger load factor (86.9% in 1Q: -2ppt y-o-y; +0.4ppt q-o-q) for its flights.
• - Read this at SGinvestors.io -

Cargo business may remain lacklustre

• SIA’s cargo business swung to operating profit sequentially on improved load factor at 57.7% (+5.9ppt y-o-y; +0.6ppt q-o-q). Supported by robust e-commerce flows and stronger demand for air freight given the Red Sea issue and port congestion, cargo yield inched up 2.6% q-o-q.
• We understand that SIA’s cargo network serves a broader mix of routes & destinations that do not necessarily see rates rise as much as other Asia Pacific carriers.
• On a y-o-y basis, cargo yield slid 19.1% amid increased bellyhold cargo capacity even though it still hovers about 18.4% above pre-pandemic levels.

Embarking on more strategic initiatives

• Read more at SGinvestors.io.

Eric Ong Maybank Research | https://www.maybank-ke.com.sg/ 2024-08-01 SGinvestors.io

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