- SIA’s Jul 24 pax load factor dropped to below pre-pandemic levels for the first time since Singapore’s reopening, although pax capacity supply was still slightly below pre-pandemic levels. Pax load factor also dipped m-o-m despite July typically being a seasonally stronger month than June.
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- Downgrade SIA to SELL with a lower target price.
Key highlights for Singapore Airlines (SIA)'s Jul 24 operation data release on 15 Aug.
Pax load factor weaker than expected, a sign of competition catching up.
- SIA (SGX:C6L)’s Jul 24 pax load factor missed our expectation by almost 2ppt, and for the first time stood below pre-pandemic (Jul 19) levels, with a 0.2ppt shortfall. On a m-o-m and y-o-y basis, pax load factor dipped 1.8ppt and 4.2ppt respectively. See SIA's announcement dated 15 Aug.
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- on the month-length-adjusted basis (31 days in July vs 30 in June), Jul 24 capacity supply was largely flattish vs Jun 24. It is likely a signal that competition is catching up faster than our previous expectation.
- In addition, SIA said it experienced lower load factors for East Asia route region notwithstanding robust growth in passenger traffic, due to the substantial capacity expansion in North Asia.
- We note that Chinese airlines are suffering some overcapacity issue, which might have some negative spillover effects on the region.
Cargo data largely in line; recovery continues at a moderate pace.
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