The aviation sector faced unprecedented challenges during the COVID-19 pandemic, with travel restrictions bringing global air travel to a near standstill. Passenger numbers plummeted, airlines grounded fleets, and airports became eerily quiet. This resulted in significant financial strain across the industry, leading to layoffs, furloughs, and in some cases, bankruptcies.
However, as we move a couple of years beyond the pandemic’s peak, the aviation industry is experiencing a much-needed take-off. The easing of travel restrictions, coupled with the rollout of vaccination programs and effective public health measures, has allowed for a gradual return to international travel. This resurgence is fueled by a surge in pent-up demand from individuals eager to resume business trips, vacations, and reunions with loved ones. Airlines are ramping up operations, and airports are once again bustling with activity.
Why Invest In Airline & Aviation Stocks
Aviation is a critical component of the global economy, facilitating international trade, tourism, and business travel. Governments and private sectors worldwide continue to invest heavily in airport infrastructure, technology, and services to accommodate future growth and improve efficiency. Such investments enhance the capacity and quality of aviation services, making the sector more attractive for long-term investments.
Aviation companies often have diverse revenue streams. For instance, airlines generate income from passenger services and cargo operations, loyalty programs, and ancillary services such as in-flight sales. Similarly, companies like SATS Ltd and SIA Engineering Company Ltd provide various services, from ground handling and catering to aircraft maintenance, repair, and overhaul (MRO). This diversification helps mitigate risks and can lead to more stable financial performance.
Major players in the aviation sector often have strong market positions and significant brand loyalty. Companies like Singapore Airlines Ltd are renowned for their quality of service, safety, and reliability. This strong brand equity can translate into a loyal customer base, which is crucial for sustained revenue generation, especially as travel demand returns to pre-pandemic levels.
Singapore, a key aviation hub in the Asia-Pacific region, is at the forefront of this resurgence. Known for its strategic location, world-class infrastructure, and efficient services, Singapore’s aviation sector is poised to benefit significantly from the recovery in global travel.
With that, let’s examine the financial health and prospects of four major players in Singapore’s aviation ecosystem: Singapore Airlines Ltd (SGX: C6L), SATS Ltd (SGX: S58), SIA Engineering Company Ltd (SGX: S59), and Singapore Technologies Engineering Ltd (SGX: S63).
Singapore Airlines Ltd (SGX: C6L)
Singapore Airlines (SIA) (SGX: C6L), the national carrier of Singapore, is a leading global airline known for its top-notch service and extensive network. SIA’s latest financial results showed strong signs of recovery, with increasing passenger loads.
For the financial year ended 31 March 2025 (FY2024/25), SIA’s total revenue rose 2.8% year-on-year to a record S$19.5 billion, up from S$19.0 billion the year before. SIA reported an operating profit of S$1.7 billion and also benefited from a one-off non-cash accounting gain of S$1.1 billion resulting from the Air India-Vistara merger.
Shareholders will be delighted to note that a final dividend of 30 cents per share for FY2024/25 was declared. Including the interim dividend of 10 cents per share paid, the total dividend for the latest financial year will be 40 cents per share.
Based on its current share price of $6.58, it’s trading at a price-to-earnings (P/E) ratio of about 8.3.
SATS Ltd (SGX: S58)
SATS (SGX: S58), a leading provider of inflight catering and ground handling services at major airports worldwide, is another key player in Singapore’s aviation sector. SATS’s latest financial results reflect the strong recovery in the aviation sector.
For the full year ended 31 March 2025 (FY25), SATS revenue increased 13.0% to S$5.82 billion, up from S$5.15 billion the year before. The company also reported a net profit of S$243.8 million, representing a 332% increase compared to the S$56.4 million profit recorded a year prior.
As profitability increase, SATS also saw a dividend increase to 3.5 cents per share, up from 1.5 cents per share a year ago.
SATS shares are currently trading at $3.47, translating to a P/E ratio of about 20x
SIA Engineering Company Ltd (SGX: S59)
SIA Engineering (SGX: S59), a subsidiary of Singapore Airlines, is a world-renowned provider of aircraft maintenance, repair, and overhaul (MRO) services. The company’s recent financial results demonstrate a resurgence in MRO demand as airlines resume operations.
SIA Engineering reported a revenue growth of 13.8% to S$1.24 billion for FY2024-25, reflecting continued demand for MRO services. Net profit also increased to $139.6 million, up 44% compared to the year before.
The MRO outfit has declared a final dividend of 7.0 cents per share for FY2024-25. Including the interim dividend of 2.0 cents per share already paid, the total dividend payout will be 9.0 cents per share. This is up from 8.0 cents per share declared a year back.
SIA Engineering shares last traded at S$3.66.
Singapore Technologies Engineering Ltd (SGX: S63)
Singapore Technologies (ST) Engineering (SGX: S63) is a diversified engineering conglomerate with a major presence in the aerospace sector.
For FY2024, the company ended the year with revenue of S$11.3 billion, representing an increase of approximately 11.6% compared to the previous year. The net profit was S$702 million, up from S$586 million in the previous year.
The group had an order book of S$28.5 billion at the end of December 2024, of which about S$8.5 billion is expected to be delivered in 2025.
ST Engineering has a final dividend of 5.0 cents per share. When combined with the quarterly interim dividends, the total dividends for FY2024 will be 17.0 cents per share.
The engineering conglomerate is currently trading at S$8.29.
Taking To The Skies
The Singapore aviation sector is experiencing good growth, and the four companies analysed here are all well-positioned to capitalise on this trend.
From a pure-play airline company to companies supporting the aviation sector, investors have plenty to choose from.
However, those seeking exposure to the local aviation sector should carefully analyse the company’s financial performance, management prowess, and future prospects before making an investment decision.
Read Also: How Much You Can Earn As A Singapore Airlines (SIA) Air Stewardess/Air Steward
