SIA (SGX:C6L) reported a 1.5% y-o-y increase in 1QFY26 group revenue to S$4.8b. Passenger flown revenue rose 0.9% y-o-y to S$3.9b.
Traffic growth of 4.1% exceeded capacity expansion of 3.3% as air travel demand remained robust; as a result, passenger load factor (PLF) improved 0.7 percentage points (ppt) to 87.6%, notwithstanding a 2.9% dip in passenger yields.
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Group expenditure outpaced revenue growth for the period, increasing 3.2% y-o-y to S$4.4b.
This was driven by an 8.5% y-o-y rise in non-fuel expenditure on capacity increase and inflation. Net fuel costs were more benign, improving 7.9% y-o-y as lower fuel prices offset higher volume uplifted and a net fuel hedging loss (versus gain in 1QFY25).
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1QFY26 PATMI fell 58.8% y-o-y.
PATMI for the quarter, however, came in 58.8% lower y-o-y at S$186m due to higher net interest expense (versus income in 1QFY25), as well as S$121.6m worth of share of losses from associates, most notably from Air India.
This marks the first quarter in which SIA has fully accounted for Air India’s financial performance after the Vistara-Air India merger was completed in Nov 2024.
The losses from Air India were the largest detractor for the quarter, in our view, causing PATMI to miss our expectations, even though revenue was in line (16% and 25% of our initial full year forecasts, respectively).
Cautiously optimistic that corresponding Air India share of losses will narrow over time.
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Above is an excerpt from a report by OCBC Investment Research. Clients of OCBC Securities may be the first to access the full PDF report @ https://www.iocbc.com/.
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