<News Analysis> Recovery momentum continues in July
- The SIA group’s operational metrics continued to strengthen in July, with overall group traffic reaching 71% of 2019’s level as passenger load factors (PLF) continue to be robust and the airline restored more capacity.
- PLF at the flagship carrier, SIA, remained near record levels at 87.7%; Scoot saw a significant improvement in PLF to 86.0% during the month, up from 75.2% the previous month, and on-par with its pre-pandemic range.
- Cargo volumes dipped marginally on a m-o-m basis, while cargo load factors declined again, but were still within our expectations.
Maintain BUY and TP of S$6.60.
- Overall passenger traffic was encouraging in July – the group’s PLF of 87.4% is the second highest monthly PLF in SIA group’s history.
- PLFs across several key markets for SIA, like the Americas, Europe and the Pacific held above 90% in July-22, which bode well for passenger yields.
- Scoot achieving pre-pandemic PLFs was a surprise to us, given its relatively outsized exposure to the Greater China market, which remains largely closed for now.
- We remain hopeful on Japan and China (two crucial markets for the group) reopening in the near-term and continued improvement in corporate travel activity.
- No change to our capacity projections for now (76% of pre-pandemic levels in 3Q22, up from 61% in 1Q22), but there may be upside to our earnings forecasts if load factors were to be sustained at such levels.