SIA

SIA: Jun '15 operating statistics were disappointing amid an overall decline in traffic and load factors.

Parent carrier SIA’s passenger load factor (PLF) slipped 1.6ppt to 79.9%, despite 1.5% capacity reduction, as passenger traffic declined a sharper 3.5%.

Likewise, regional carrier SilkAir's PLF was shaved by 0.4ppt to 72.3%, as the 3.4% drop in traffic outpaced a 1.5% reduction in capacity.

Cargo load factor dropped 2.4ppt to 60.3%, as traffic fell 1.9% against a 2.1% capacity growth.

Geographically, PLFs for Europe (81.3%, -4.5ppt), West Asia/Africa (74.1%, -3.7ppt) and Americas (85.1%, -1.3ppt) routes underperformed due to weaker demand and keen competition, while demand to East Asia (75.7%, -1.2ppt) was weighed by the outbreak of MERS virus in Korea and Thailand.

The only bright spot was in South West Pacific (82.9%, +2.7ppt), which improved on capacity consolidation.

The outlook for Europe, a key market, is likely to stay depressed in the coming months following the addition of new capacity out of Singapore by rival full service carrier Qatar Airways in May.

System-wide, group's PLF descended 1.4ppt to 80.0%, with wholly-owned Scoot (82.6%, +1.3ppt) showing some lift-off only to be dragged by 55.8%-owned Tigerair (85%, -1.3ppt).

Nevertheless, the street remains mostly neutral to bullish on the carrier with 7 Buy, 10 Hold and 2 Sell ratings with consensus TP of $12.33.