June-22 Operating stats surpassed expectations
- The SIA group’s operational metrics continued to strengthen in June-22, with overall group traffic reaching 69% of pre-pandemic levels on the back of strong improvement in passenger load factors and capacity growth.
- Despite some drag from the North Asian market (travel restrictions are still extremely onerous in this region), the flagship carrier, SIA achieved record overall passenger load factors of 87.8%, with load factors surpassing 90% in two key markets (the Americas and Europe).
- Scoot also demonstrated solid gains, booking a 28% m-o-m increase in passenger volumes and 12.6% increase in passenger load factor (to 75.2% from 62.9% in May-22).
- These figures are notably better than our expectations, and indicate that there may be potential upside to our earnings projections for this year.
- Maintain BUY and TP of S$6.20.
Our thoughts:
- While the group’s restoration of passenger capacity has been tracking well with our projections, passenger traffic will surprise on the upside given the rapid improvement in passenger load factors over the past several months.
- SIA’s passenger traffic reached 72.3% of pre-COVID19 levels in June-22, up from 68.0% in May-22 and 27.7% in January-22. Meanwhile, Scoot’s passenger traffic soared to 55.2% of pre-pandemic levels in June-22, up from 46.5% in May-22 and a mere 8.0% in January-22.
- The robust passenger load factors seen across several markets (the Americas, Europe and Pacific) also suggests that passenger yields should be strong as well.
- Cargo volumes grew by 4.6% y-o-y, and while cargo load factors fell to 64.6% in June-22 from 76.0% at the start of the year, this was anticipated as a steep increase in passengers would naturally displace some cargo capacity (passenger luggage and lower portion of cargo-only flights)
- The cooling down of crude oil/jet fuel prices (SG jet fuel prices are now at US$130-135/bbl, down from its peak of US$166/bbl in June), if sustained, would lead to further positive surprises for the group.
- SIA will be releasing their 1QFY23 business update on 28th July, and we are hosting a post-results call on 29th July. More details to follow after the results call.
