News Analysis: Robust operating numbers in May
- SIA reported a robust set of operating numbers in May for its flagship carrier, with passenger carriage at SIA back to 68% of 2019 numbers and load factor above 80%
- Scoot also posted strong growth in carriage and load factors
- This strong set of numbers supports our investment thesis that SIA will post a firm turnaround in earnings in FY23, with potential upside risk to our numbers coming from stronger than expected ticket prices
- Maintain BUY and TP of S$6.20
SIA reported a robust set of operating numbers in May for its flagship carrier, with passenger carriage up by 10-fold to 6.45bn p-kms (representing 68% of carriage in May 2019) and load factor up by 66.6ppt to 81.5%, which is a level not seen since pre-pandemic. This is a continued improvement from strong April numbers where passenger carriage was at 5.7bn p-kms (+1,069% y-o-y) and load factor was 77.4% (+63ppt). Scoot posted a 23-fold increase in carriage to 1.1bn p-kms in May with a load factor of 62.9% (+53.6ppt), also an improvement from April’s carriage of 842m p-kms and load factor of 51.4%. On the flip side, cargo carriage declined by 3% y-o-y in May to 454m tonne-km and load factor declining 22.3ppt to 65.4%, mainly on the back of a 30% increase in capacity due to more passenger flights being added on. Nonetheless, we believe cargo operations remain in the black. This strong set of numbers support our investment thesis that SIA will post a firm turnaround in earnings in FY23, with potential upside risk to our numbers coming from stronger than expected ticket prices.