SIA dividends could take a lashing until 2018

It just cut its dividends to 9.0 S-cent for 2Q17.

Singapore Airlines (SIA)'s dividend is expected to drop from 45.0 S-cent in FY16 to 40.0 S-cent in FY17F and a further decline to 35 S-cent in FY18 amidst weak global economy, said OCBC Investment Research.

SIA has cut its interim dividend from 10.0 S-cent declared in 2QFY16 to 9.0 S-cent for 2QFY17.

According to management during the analyst briefing, the lower dividend reflects challenging outlook anticipated in 2HFY17.

"We believe this challenging weak yields nvironment is likely to persist amid overcapacity in the region and tepid lobal economic growth outlook. Also, in view of the high capital expenditure planned over the next few years as SIA takes elivery of A350s, including the first ultra-long-range version in CY18, we are expecting SIA to go into net debt position by FY19," it said in a research note.