Singapore Airlines reported lower third quarter net profit, hit by provisions for fines by the European Commission and South Korean regulator, as well as a settlement with US authorities on cargo price-fixing charges.
Phillip said that if the non-recurring cargo fines of $199.1 million were removed, SIA’s profit after tax and minority interests actually increased 21% year-on-year to $487.4 million.
Singapore Airlines, the world’s second-biggest carrier by market value, said it will reorganise to take on new challenges and pursue growth opportunities.
Executive Vice President Mak Swee Wah will take on additional responsibilities for marketing and sales as well the delivery of products and services starting Feb. 1, Singapore Airlines said today in a statement to the stock exchange. He is currently in charge of products and services.
DMG says it’s optimistic on the potential arising from Singapore Airlines’ (C6L.SG) acquisition of a 16% stake worth $65 million in China Cargo Airlines, announced Monday.
“While management has not provided any guidance on the outlook specifics, SIA’s pivotal role in the route optimization of China Cargo Airline’s freighter carriers could potentially see SIA offering direct connectivity between China and Singapore (and Asean for the matter) and Australia, while China Cargo Airlines would be dedicated to traffic in/from the mainland China region.”
Shares of Singapore Airlines <SIAL.SI>, the world’s second-biggest carrier by market value, fell as much as 1.6% this morning after it said it filled less space available on its planes for passengers and cargo in November, traders said.
The airline’s overall load factor in November was 70.1%, lower than the 71.1% recorded in October, and November 2009′s 72.3%.
UOB KayHian downgrades Singapore Airlines (C6L.SG) to Hold from Buy and cuts its target price to $15.90 from $18.00 after the carrier’s November passenger traffic growth was a "dismal" 1.1% on year.
"For the past two months, growth averaged 0.3% and 4Q is a traditional peak period for SIA. This number does not lend much confidence to SIA’s growth prospects."
Singapore Airlines (C6L.SG) gaps down at the opening and is last off 0.9% at a 4-month low of $15.32, after the carrier released data showing lower November load factors due to capacity growth outpacing the traffic increase.
Singapore Airlines (SIAL.SI), the world’s second-biggest carrier by market value, said on Wednesday it filled 70.1% of the space available on its planes for passengers and cargo last month.
The figure was lower than the 71.1% recorded in October, and November 2009’s 72.3%.
Singapore Airlines (C6L.SG) +0.9% at $15.84, Tiger Airways (J7X.SG) +1.1% at $1.87, faring better than the broader market though with both stocks are trading in low volume.
DBS, which rates the former at Buy, the latter at Hold, says there are “plenty of reasons to buy into regional airlines,” with the earnings rebound they enjoyed in 2010 likely to continue into 2011, albeit at a slower pace.
HSBC says Singapore Airlines (C6L.SG) one of top picks among Asian conglomerates, transport stocks, as remains “positive on passenger driven airlines, hotels and conglomerates leveraged to Asian consumption.”
Singapore Airlines (C6L.SG) +0.3% at $15.88, extending yesterday’s 2.7% rise which came despite news carrier setting aside $61.92 million this FY to pay fine in US relating to cargo price fixing investigation.
Singapore Airlines (C6L.SG) +3.1% at $15.90 vs STI +0.7%, rising sharply with solid 2.0 million shares traded, despite statement it will pay fine of US$48 million ($60.6 million) to US Department of Justice relating to charges of price fixing of air cargo, stemming from investigations from 2006.
UBS raises Singapore Airlines (C6L.SG) target price to $19.50 from $16.50 based on target P/BV of 1.57x, keeps Buy call.
Says SIA share price has underperformed Asian peers, +7% year-to-date vs +11%, +60% in MSCI AxJ Index, Cathay Pacific’s (0293.HK) share price, respectively.
Notes, stock trading at 10x FY12E EPS, 4x EV/EBITDA, 1.2x FY12E book value, discount to mid-cycle, peer valuations, and 5% dividend yield.
“SIA has been recovering at a slower pace in this cycle. This was likely due to its modest capacity growth and fleet reconfiguration, smaller exposure to north Asia, and competition from low cost and Gulf carriers. However, we think its business model remains solid and estimate 28% year-on-year growth in pre-ex EPS in FY12.”
Raises FY11/12/13 EPS forecasts 5%-20%, revises FY11 passenger, cargo yield assumptions upward, lowers FY11/12 operating cost estimates due to stronger SGD vs USD. Shares +0.1% at $15.56.
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Singapore Airlines (C6L.SG) off 0.1% at $15.88 in thin trade, mirroring marginal moves by other Singapore blue chips, according to Dow Jones.
Investors appear to be paying little heed to carrier’s mixed October operating data.
Still, business performance for rest of 2010 may be more promising given traditionally stronger year-end travel demand. Last month’s 79.6% passenger load factor lower than 81.1% in October last year, September’s 80.3%.
“Typically, October-December is seasonally stronger for passenger traffic as we head into the holiday season, but improving yields are key to profitability,” says Citigroup analyst Robert Kong.
October’s cargo load factor tad better at 66.4% vs 65.4% last year, 63.5% in September. Immediate support at current November low of $15.70.
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One engine will be changed on each of the planes, which will arrive in Singapore today, Chief Executive Officer Chew Choon Seng told reporters in the city-state. The move is a precautionary measure after “slight” oil staining was found in areas of the Trent 900 engines, he said.
Weekend Comment Jan 28: SIA disappoints
The full-service carrier reported a disappointing set of third quarter results after the market closed on Jan 28, falling short of the average profit estimates of analysts tracked by Bloomberg. For the three months ending Dec 31, SIA posted a 29% y-o-y fall in net income to $288.3 million, after it booked charges of as much as $199 million relating to antitrust cargo fines.
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