Citi maintains Buy on Singapore Airlines, projects high passenger numbers

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Citi predicts that Singapore Airlines’ passenger yield and earnings could exceed expectations in the summer of 2024. Despite the industry’s capacity on the airline’s key long-haul routes nearing 90-105% of pre-Covid levels by that summer, Citi expects Singapore Airlines’ passenger yield to remain high throughout the fiscal years 2024-2025. The forecast is supported by a substantial increase in forward ticket prices, as observed from the firm’s ticket booking exercises.

The data reveals that ticket prices for March through September 2024 have risen by 47% for business class and 53% for economy class since the previous review in November 2023. This increase accounts for approximately 52% of the airline’s Available Seat Kilometers (ASK). The rise in ticket prices is attributed to strong demand on Singapore Airlines’ key routes, as well as the airline’s ability to charge a premium compared to non-stop alternatives, which has been evident until July 2024.

According to Citi’s analysis, the robust demand could be a result of Singapore Airlines’ strategic early promotions aimed at establishing a base load to elevate ticket prices closer to the flight date. Alternatively, it could reflect a strong customer preference for the airline’s overall experience, which was recognized as the world’s number one airline in 2023 by Skytrax. The firm’s outlook suggests that these factors will play a significant role in the airline’s performance and share price trajectory in the near future.

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