If you are one of those who are rueing over your decision to pay for flights on Singapore Airlines over the past 12 months but did not invest in its stock, join the club.
Most of us already know that travelling overseas is very much one of Singaporeans’ favourite pastimes. Ever since the government removed all COVID-19-related restrictions and the WHO declares an end to COVID-19 as a global health emergency, Singaporeans have been out in full force to revenge travel.
As such, it comes as no surprise when the SIA Group (SGX: C6L) announced that it has posted its highest net profit ever in its 76-year history. As a result, its share price is currently trading at $7.15, up about 30% since the start of the year.
In other words, if instead of spending $3,000 at the start of the year on SIA tickets, you bought its stock, your stocks would be worth $3,900 today.
In this edition of 4 Stocks This Week, we take a closer look at some notable highlights from SIA FY2022/2023 earnings announcement.
#1 SIA’s Group Revenue & Profits Are Both At Record High
As a testament to how strong SIA’s performance has been since the end of the pandemic, look no further from its group revenue, operating profit and net profit.
Group revenue increased by $10.16 billion, a year-on-year increase of 133.4% to a record of $17.78 billion. Both group operating profit ($2.69 billion) and net profit ($2.16 billion) also saw SIA post a record high.
It’s also worth noting that while SIA is seeing record revenue and profit, group passenger capacity reached 79% of pre-Covid level (March 2023 compared to January 2020). However, passenger load factor, a measurement of the available seating capacity that has been filled with passengers, is at 85.4%, the highest in the group’s history.
#2 Revenue Per Available Seat-Kilometre (RASK) Is At 10.0 Cents, The Highest In Group’s History
A good metric to look at when evaluating airlines is to look at Revenue Per Available Seat-Kilometre (RASK). This is how much, on average, the airline makes per seat for each kilometre it flies. A high RASK also means that passengers are willing to pay a high amount to fly with the airline.
At 10.0 cents, the highest yearly RASK in Group’s history, this means that SIA makes about $100 per seat for every 1,000 kilometre it flies.
#3 Cargo Segment Remains Strong For SIA And Better Than It Was Pre-Pandemic
The cargo segment for SIA was a strong driver of revenue during the pandemic when passenger volume dropped.
While cargo flown revenue fell $735 million (-16.9%) to $3,604 million as a result of lower cargo loads (-11.4%) and yields (-6.2%) compared to a year before, it’s worth pointing out that this is still the second-highest annual cargo revenue figure in the Group’s history.
According to SIA, the “cargo segment’s performance moderated year-on-year as the demand for air freight declined, and as supply chain disruptions brought about by the Covid-19 pandemic subsided. Macroeconomic headwinds dampened consumer demand, while high inventory levels led to a slowdown in new orders”.
“Nevertheless, cargo revenue remained 83% above the pre-Covid level recorded in calendar year 2019.”
#4 Scoot Is Thriving
Scoot is the low-cost airline of the SIA Group. While its flights tend to be cheaper compared to Singapore Airlines, this doesn’t mean that it can’t generate good financial results for the group
For FY2022/2023, Scoot achieved a record operating profit of $148 million, a reversal from the $453.6 million loss incurred in FY2021/2022.
Another encouraging sign is that in 4Q2022/2023, Scoot saw a record passenger load factor of 91.5%. It also saw a record RASK of 6.9 cents for FY2022/2023. In comparison, RASK for Scoot in FY2019/2022 was at 4.8 cents.
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