SIA

SIA: Cheaper fuel still the main earnings driver (BY OCBC)
- Operating results for May 16 came in weak for the parent airline, while both SilkAir and Scoot continued to show growth momentum.
- In the strategic alliance with HNA, OCBC believes it will help Virgin Airlines compete against Qantas with enhanced connectivity to China and Europe through China over the longer-term.
- However, OCBC thinks the industry is still operating in weak yields environment, and expect SIA’s FY17F earnings to be largely driven by much lower hedging losses and more fuel savings from new aircraft being delivered over the year.
- OCBC maintains its Buy with unchanged TP of $12.00.