Its flagship passenger segment remains the top profit source.
DBS Group Research reported a forecast of Singapore Airlines (SIA)’s net profit, rising by 84.17% YoY to $663m in 2018.
SIA previously had a 55.22% YoY decline in net profit, from $804m in 2016 to $360m in 2017.
SIA’s flagship passenger segment has historically been its main earnings driver, contributing $386m in EBIT in 2017, and continuing to rise in 1H2018.
Meanwhile, SIA Engineering’s EBIT contributed $72m, whilst Silkair, Scoot, and Tigerair had an aggregated EBIT of $186m last year.
SIA’s Cargo division helped offset lower contributions from Silkair and Scoot in 1H2018, and may remain a significant contributor until 2019.
Despite jet fuel price surges, DBS also forecasted a 2.5% yield improvement for 2019 and 2020. Jet fuel currently has a price of US$85 per barrel.
“SIA’s share price could rerate if it can demonstrate a sustained improvement in revenues either from increasing its passenger yield or growing other revenue streams and/or materially lower its operating costs without affecting product quality and revenues,” DBS added.
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