Singapore Airlines gets the jitters from this global economic threat

It worsens woes of passenger competition.

According to Maybank Kim Eng, premium carriers such as Singapore Airlines (SIA) are still bearing the brunt of competition for passengers from low-cost carriers. To improve passenger loads, SIA has had to entice customers with promotional fares which have had the effect of suppressing yields.

SIA’s Cargo division has also had to contend with a poor air freight environment, with recent fines for alleged cargo price-fixing adding to its woes. SIA is not sitting still – it is embarking on significant aircraft cabin interior retrofits and lounge upgrades worldwide to further differentiate itself from its competitors. However, these upgrades will yet take time to show results, and SIA remains a HOLD for now.

Here's more from Maybank Kim Eng:

Fiscal Cliff still remains a major risk. As our BUY calls in the transport sector are essentially premised on a US-led economic recovery, an inability to resolve the US Fiscal Cliff would further delay such a forecasted recovery and further drag out the already prolonged economic slump. While the repercussions of such an event are significant, the probability of its occurrence is low, as interim fixes are more likely to be put in place rather than allowing the economy to fall off the cliff.