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SINGAPORE: Shares of Singapore Airlines (SIA) soared to their highest levels in more than three years on Wednesday (May 17), as the national carrier emerged from the woes of the COVID-19 pandemic to deliver a record annual profit.
The stock rose as high as S$6.08 in early trade before giving up some gains to finish at S$6.01, up 1.52 per cent or S$0.09 for the day. This marks the counter’s highest level since February 2020.
After the market closed on Tuesday, SIA reported a net profit of S$2.16 billion (US$1.63 billion) for the year ended Mar 31, rebounding from a loss of S$962 million a year earlier.
The upbeat earnings results – a record in its 76-year history – also reversed three straight years of losses brought about by the pandemic.
Strong demand for air travel following the reopening of borders drove revenue, operating profit and passenger load factor, the airline said in its media release.
Group passenger capacity reached 79 per cent of pre-COVID-19 levels at the end of March, with SIA and Scoot carrying a total of 26.5 million passengers, six times more than the year before.
The passenger load factor, which measures how well airlines are filling available seats, also rose by 55.3 percentage points to 85.4 per cent – the highest in the company’s history.
SIA said that demand for air travel will remain robust moving forward, underpinned by the recovery in air travel in East Asia. Forward sales also remain healthy across all cabin classes, led by a strong pickup in bookings to China, Japan and South Korea.
The reopening of China, in particular, will help to accelerate SIA’s recovery, with passenger volumes set to return to 2019 levels in the second quarter of FY2024, said DBS Research.
“(We) hold the view that passenger yields should remain at elevated levels for some time (albeit moderating) on the back of revenge travel and measured capacity growth by competitors,” the analysts wrote in a note.
This means that the airline may continue to outperform in earnings, DBS said, adding that fears over the impact of a recession may be overblown.
“We continue to have above-consensus earnings projections, and believe that SIA will continue to deliver positive surprises in the near term,” the analysts said.
