What the slump in Changi's flight movements means for SATS

Flights handled by the airport dropped 1.7% in February.

Changi Airport's flights movements fell for the first time in 23 months in February, declining 1.7% year-on-year.

This came as pax throughput recorded a 1.5% growth, substantially lower than in the last five
months.

"The decline in flights handled in February came amidst higher pax throughput, which suggests that airlines could be cutting flight frequencies and flying with fuller loads," said UOB KayHian.

Whilst this is positive for airlines, this is negative for ground handlers such as SATS, argued the brokerage firm, noting that it would result to a weaker revenue growth for the said handler's gateway services.

Here's more from UOB KayHian:

SATS had previously indicated that much of 3Q’s profit was driven by greater volumes of cargo handled at Changi following Hanjin’s bankruptcy.

This is unlikely to be repeated in 4Q, as cargo handled at Changi rose only 4% in January-February, less than half of 3Q’s. In contrast, SIA’s cargo earnings are more dependent on: a) cargo load factors, and b) cargo yields. SIA cargo loads rose 1.6ppt in January-February 2017, greater than 3Q’s 0.9ppt improvement.