SIA

SIA: CLSA analyzes SIA’s Oct operating data. Notes market conditions are still challenging but at least SIA is maintaining high load factors and consistent passenger growth, achieved by pricing and promotional activity as it discounted fares in a difficult market. The regional market remains a competitive strength of SIA with Silkair maintaining 20% growth and both brands managed to increase load factors on the formers more disciplined capacity approach particularly to USA. Cargo demand however remains disturbingly weak as a typical lead indicator explaining the recent decision to park a freighter. CLSA still sees the need to see further capacity reductions, which have started in freight but passenger growth, and the lack of a demand shock means the passenger capacity is unlikely to be withdrawn. The house maintains its Outperform rating with TP $12.15, citing distressed vaulations.