Can SATS weather the storm of its weakening yields?

Higher airline loads are picking up the slack.

Weaker yields are nothing to worry about for the airline services firm, as numerous growth drivers are expected to ensure a smooth ride for the company.

According to a report by OCBC Research, despite weak yields, higher airline loads are expected to drive earnings, especially with the opening of Terminal 4 in Singapore within the next 1-2 years.

Additionally, its productivity drive is also expected to improve profitability, evident with the recent S$18m investment in new highly automated kitchen production line at Changi Airport.

Meanwhile, it also booked improving performance at its Japanese subsidiary after it won S$325m catering contract in Japan with Delta Airlines, expanded into non-aviation food catering in China through JV with Wilmar, and struck a profitable JV with DFASS Singapore to provide inflight and ground-based duty free or paid sales of liquor and merchandises.