Airlines/SIA: Iata has warned that global airlines face headwinds towards the end to the year as high jet fuel prices and a decline in business and consumer confidence clip growth rates. This is reflected in the 0.4% decline in Jul cargo traffic even as pax traffic grew 5.9%. The increase in pax traffic helped boost load factors by 0.5 ppt to 83.1% in Jul. As a comparison SIA’s PLF was only 81.6% in the same month. The last recession and financial crisis cost airlines about 2 years of growth. Int’l pax traffic is now about 12% higher than pre-slump levels in early 2008, whereas SIA is still 6% below.
At $10.93, SIA is trading at 0.92x P/B vs the troughs of 0.8x in FY09/10and 0.88x during the 2003 SARs crisis.
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