Singapore Airlines *Official* (SGX:C6L)

mrclubbie

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Singapore Airlines' Q2 loss narrows on cost cuts, air travel pick-up​



SINGAPORE: Singapore Airlines (SIA) said on Thursday (Nov 11) market conditions were improving after it reported a narrower second-quarter loss due to cost-cutting efforts, record cargo revenue and an improvement in passenger numbers from a low base.

The net loss of S$427.6 million for the three months to Sep 30 was down from a record S$2.34 billion loss a year earlier, when COVID-19 restrictions hammered air travel and the airline took large impairment charges on older planes.

It posted a net profit of S$94.5 million in the September quarter of 2019.

Revenue doubled in the second quarter to S$1.53 billion due to strong cargo demand and a four-fold rise in passenger numbers from a very low base.

The airline said monthly operating cashflows were near breakeven levels and it expected passenger capacity to reach 43 per cent of pre-pandemic levels by December, serving half of its previous destinations.

In September, passenger capacity reached around 32 per cent of pre-pandemic levels, though on average it filled only 20 per cent of the seats on its planes.

International air travel continued to recover in the first half of the 2021/2022 financial year, said SIA.

This comes as global COVID-19 vaccination rates increased and travel corridors - such as Singapore's vaccinated travel lane (VTL) arrangements - came into effect.

Singapore has recently opened vaccinated travel lanes without quarantine with more than a dozen countries including Britain, the United States, Germany, Australia and South Korea.

Neighbouring Malaysia will be added to the list from Nov 29, allowing for more flights between Singapore and Kuala Lumpur, one of the world's busiest international routes before the pandemic.

The airline will restart Singapore-London flights on its flagship Airbus SE A380 super-jumbos on Nov 18 and will fly them to Sydney from Dec 1.

The carrier said the launch of the first VTL arrangements with Brunei and Germany in early September "resulted in an uptick in demand", especially to the latter.

"Since the start of the pandemic, (SIA Group) has proactively taken steps to review all aspects of our operations to ensure that we are able to quickly ramp up as air travel recovers," SIA said.

"As a result, the Group was the first to announce and open sales for VTL flights, capturing early pent-up travel demand."

SIA, like Hong Kong-based rival Cathay Pacific Airways, has no domestic market and has been hard-hit by border closures.

Singapore has capped daily arrivals for the vaccinated travel lanes, meaning the allowable traffic is in the single-digit percentages of pre-pandemic passenger numbers.

But it is an encouraging sign for travel in the Asia-Pacific region, which had had some of the world's toughest border controls during the pandemic.

SIA's management team will hold a results briefing for analysts and media on Friday.
 

mrclubbie

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aWfTckA.png
 

vsvs24

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Hmmm. No return on investment timeline. They can do so in the past when they are profitable. Now burning cash this mindset still not changed. Think top management pay not cut much, they don't feel the pinch.
 

reddevil0728

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Hmmm. No return on investment timeline. They can do so in the past when they are profitable. Now burning cash this mindset still not changed. Think top management pay not cut much, they don't feel the pinch.
How would you suggest they do to reduce cash burn?
 

reddevil0728

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Don't spend this $230m to upgrade cabin. Now people who want to fly just want to get onto the designated flights. Upgrade or not they will take.
Then I don't think you understand SIA's clientele and business model.
 

tan1688

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Means valuation of SIA share price at SGD$5.30 today when 10yr convertible bond changes to mother share 10yrs later is diluted to SGD$2.65
 

reddevil0728

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They are on handouts now. Should not spend like they use to do.
It’s spending for what purpose that matters.

you are assuming all spend are equal. Which ain’t the case.

if you are spending on operation cost, then I agree they better look at ways to cut that cost.

but if you think that upgrading of cabin is considered an operation cost spend rather than a capital investment for future revenue, hence you said “people who want to fly just want to get onto the designated flights. Upgrade or not they will take.” Then it shows that you don’t fully understand SIA’s business model and where SIA makes its bulk of money from.
 
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vsvs24

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It’s spending for what purpose that matters.

you are assuming all spend are equal. Which ain’t the case.

if you are spending ok operation cost, then I agree they better look at ways to cut that cost.

but if you think that upgrading of cabin is considered an operation cost spend rather than a capital investment for future revenue, hence you said “people who want to fly just want to get onto the designated flights. Upgrade or not they will take.” Then it shows that you don’t fully understand SIA’s business model and where SIA makes its bulk of money from.
Got your point. Just that don't like the VP saying SIA don't consider investment timeline when spending 💰on cabin. Means they don't even do ROI before they spend. $230 million is a lot of money.
 

reddevil0728

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Got your point. Just that don't like the VP saying SIA don't consider investment timeline when spending 💰on cabin. Means they don't even do ROI before they spend. $230 million is a lot of money.
Can quote what did the VP say and when/where it was said? Just want to listen to the full context
 

reddevil0728

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it's not a quote. will be a little cautious on reading into it. depends on how the reporter wants to frame it.

but let's assume it is true. then yes. optically doesn't seem to be very logical.
 

vsvs24

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it's not a quote. will be a little cautious on reading into it. depends on how the reporter wants to frame it.

but let's assume it is true. then yes. optically doesn't seem to be very logical.
The paragraph after that is worse. He say they can make the investment because of support from stakeholders who had contributed to the ability to make such investments.

Hey. Shareholders and Temasek subscribe to SIA rights to keep it afloat, not for them to spend $230m on cabin upgrade.
 

reddevil0728

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The paragraph after that is worse. He say they can make the investment because of support from stakeholders who had contributed to the ability to make such investments.

Hey. Shareholders and Temasek subscribe to SIA rights to keep it afloat, not for them to spend $230m on cabin upgrade.
again. it's not a direct quote. so i will be wary if that's the tone he's communicating.

but if that's the case then is tone deaf.
 

mrclubbie

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CGS-CIMB upgrades SIA to 'add', positive on FY2022 recovery​



CGS-CIMB has upgraded its call on Singapore Airlines (SIA) to "add" from "hold" with a higher target price of S$5.86, as it expects the flag carrier to show a strong recovery in Q3 FY2022 despite uncertainties surrounding the Omicron variant.

In a research note on Wednesday (Dec 1), analyst Raymond Yap said the revised target price of S$5.86 from S$5.81 previously is based on an unchanged target price-to-book value ratio (P/BV) multiple of 1.06 times, applied to the end-FY2023 adjusted book value per share of S$5.53.

The P/BV multiple of 1.06 times is 1 standard deviation above the mean since 2011 of 0.93 times.

"We used a P/BV that is above the mean to reflect our optimism over the meaningful reopening of international travel markets by mid-2022," he said.

Even though some countries, including Singapore, have imposed fresh border control measures, Yap believes that "there is hope" as a South African doctor told Reuters that the Omicron symptoms are not severe.

"If so, nations may resume progressive reopening sooner rather than later," said Yap.

Thus, he expects the rapid expansion of quarantine-free travel via the Vaccinated Travel Lane (VTL) schemes to boost SIA's recovery.

According to the Civil Aviation Authority of Singapore, the countries with which the Republic has launched VTLs have accounted for some 60 per cent of total daily arrivals at Changi Airport in pre-pandemic times. Though a quota of 15,000 passengers daily has been imposed on VTL travel, Yap expects this figure to be increased with time.

SIA has also said that demand for VTL flights has been very strong, and it has forecasted its available seat kilometre (ASK) passenger capacity to rise to 43 per cent of pre-Covid-19 level by Dec 31 2021F, from 33 per cent in August.

Therefore, Yap anticipates that SIA will eventually deploy 74 per cent of the airline's pre-Covid-19 ASK capacity come FY2023.

Additionally, he noted that the airfreight markets remain very strong, and SIA can look forward to a very robust year-end peak season in Q4 CY2021, as well as high airfreight rates.

On the flipside, Yap identified potential downside risks, such as longer-than-expected shutdowns in global international travel should countries keep their travel bans and restrictions on inbound travellers to quell imported Covid-19 cases.

As Singapore reopens its border to more countries, the analyst expects SIA to face competition as many airlines may be eager to reinstate passenger seat capacity quickly. As such, there could be intense competition for the incremental passenger, and passenger yields may soften, he said.

The resumption of transfer traffic through Changi Airport - a significant portion of SIA's pre-pandemic business - could also be slower in pace compared to point-to-point traffic, as transfer traffic depends on regulatory permissions across several national jurisdictions.

Also, additional passenger aircraft deployments may also cause cargo yields to fall from their currently-elevated levels as belly-hold cargo capacity is reintroduced, said Yap.

Shares of SIA were trading S$0.01 or 0.2 per cent higher at S$4.83 as at the midday break on Dec 2.
 

vsvs24

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CGS-CIMB upgrades SIA to 'add', positive on FY2022 recovery​



CGS-CIMB has upgraded its call on Singapore Airlines (SIA) to "add" from "hold" with a higher target price of S$5.86, as it expects the flag carrier to show a strong recovery in Q3 FY2022 despite uncertainties surrounding the Omicron variant.

In a research note on Wednesday (Dec 1), analyst Raymond Yap said the revised target price of S$5.86 from S$5.81 previously is based on an unchanged target price-to-book value ratio (P/BV) multiple of 1.06 times, applied to the end-FY2023 adjusted book value per share of S$5.53.

The P/BV multiple of 1.06 times is 1 standard deviation above the mean since 2011 of 0.93 times.

"We used a P/BV that is above the mean to reflect our optimism over the meaningful reopening of international travel markets by mid-2022," he said.

Even though some countries, including Singapore, have imposed fresh border control measures, Yap believes that "there is hope" as a South African doctor told Reuters that the Omicron symptoms are not severe.

"If so, nations may resume progressive reopening sooner rather than later," said Yap.

Thus, he expects the rapid expansion of quarantine-free travel via the Vaccinated Travel Lane (VTL) schemes to boost SIA's recovery.

According to the Civil Aviation Authority of Singapore, the countries with which the Republic has launched VTLs have accounted for some 60 per cent of total daily arrivals at Changi Airport in pre-pandemic times. Though a quota of 15,000 passengers daily has been imposed on VTL travel, Yap expects this figure to be increased with time.

SIA has also said that demand for VTL flights has been very strong, and it has forecasted its available seat kilometre (ASK) passenger capacity to rise to 43 per cent of pre-Covid-19 level by Dec 31 2021F, from 33 per cent in August.

Therefore, Yap anticipates that SIA will eventually deploy 74 per cent of the airline's pre-Covid-19 ASK capacity come FY2023.

Additionally, he noted that the airfreight markets remain very strong, and SIA can look forward to a very robust year-end peak season in Q4 CY2021, as well as high airfreight rates.

On the flipside, Yap identified potential downside risks, such as longer-than-expected shutdowns in global international travel should countries keep their travel bans and restrictions on inbound travellers to quell imported Covid-19 cases.

As Singapore reopens its border to more countries, the analyst expects SIA to face competition as many airlines may be eager to reinstate passenger seat capacity quickly. As such, there could be intense competition for the incremental passenger, and passenger yields may soften, he said.

The resumption of transfer traffic through Changi Airport - a significant portion of SIA's pre-pandemic business - could also be slower in pace compared to point-to-point traffic, as transfer traffic depends on regulatory permissions across several national jurisdictions.

Also, additional passenger aircraft deployments may also cause cargo yields to fall from their currently-elevated levels as belly-hold cargo capacity is reintroduced, said Yap.

Shares of SIA were trading S$0.01 or 0.2 per cent higher at S$4.83 as at the midday break on Dec 2.
Just based on what 1 South African doctor say 😂
 
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