Hopes soar for SIA's cargo operations in 2018

SIA’s Cargo load factor increased by 3.9 ppt YoY.

During the past five years, cargo operations dragged Singapore Airline's (SIA) profits, but this is now changing as both volume and yields improve, UOB Kay Hian said.

In November, SIA’s Cargo load factor increased by 3.9 ppt YoY, the highest YoY change in five months, whilst October’s and November’s cargo load factors were the highest in 12 years.

According to an analysis, rising pharmaceutical exports, higher e-commerce transactions, and the strong Asia Pacific to North American rates are supporting the improving profitability.

Most large air cargo operators such as Fed Ex and UPS have already guided by continued growth in 2018. The broker expects the same for SIA.

"Like the pax business, this holds scope for higher YoY and QoQ profitability in 3Q2017," said UOB Kay Hian analyst K Ajith.