Could improved load factors save the day for SIA?

Capacity reductions spearheaded the growth.

Analysts are upbeat at how optimistic SIA’s load factors are looking right now, as they bank on the improvement to lead SIA into black in 2Q16.

According to analysts from UOB Kay Hian, SIA’s parent operations were $2m in the red in the previous period, excluding $110 m in slot compensation, while it has improved by 7.4ppt in the current period.

“Thus, unless SIA’s pax yield declines by more than 9% qoq, the parent airline is likely to be profitable in the current quarter,” UOB Kay Hian said.

Meanwhile, SIA’s cargo traffic also showed signs of life due to stronger loads in the South West Pacific market. However, UOB Kay Hian says traffic is still expected to post a loss in 2Q16.

IT-related shipments such as iPhones and electronic gadgets have also been boosting SIA’s cargo loads, but the improvement comes on the back of reduced cargo yields, UOB Kay Hian said.

“Cargo loads improved to South West Pacific, Asia and Africa, despite a decline to the Europe and US markets,” they added. “With cargo load factors still 0.8ppt lower than in 1QFY16 (61.1%), we expect cargo operations to continue to be in the red.”