Here’s what’s keeping SIA afloat despite turbulent yields

Passenger load factor fell to 73.6% in May.

Singapore’s flag carrier is experiencing a rough patch in terms of yields, with capacity growth of 2.9% outpacing its 1.8% traffic growth.

However, according to analysts from OCBC, the weak yields environment is being offset by savings brought about by cheaper fuel.

“Operating in weak yields environment, we expect SIA’s FY17F earnings to be driven by much lower hedging losses and higher fuel savings from new aircraft being delivered over the year, offsetting lower yields,” OCBC said.

Additionally, Singapore Airlines can also draw positive news from its sister airlines SilkAir and Scoot, which continued to show growth momentum.

“SilkAir’s posted solid performance as passenger loads for May 16 grew 16.7% YoY, which exceeded capacity growth of 15.1% resulting in a 0.9ppt improvement in PLF to 69.5%.

Another positive came from Scoot as it continued its strong growth momentum as May 16 passenger loads jumped 56.9% YoY but outpaced by capacity growth of 60.1% as number of aircraft increased from six to eleven,” OCBC said.