Navigating fuel headwinds and tourism weakness: Maintain Reduce; raise target price to SGD6.87

Research evidence excerpt

Navigating fuel headwinds and tourism weakness: Maintain Reduce; raise target price to SGD6.87

Global Markets Research

Singapore Airlines SIAL.SI SIA SP 15 July 2026

EQUITY: TRANSPORT/LOGISTICS

RatingNavigating fuel headwinds and tourism weakness Remains Reduce

Target price

Increased fromMaintain Reduce; raise target price to SGD6.87 SGD 6.87 SGD 5.71

Cargo yields to ease in 2H26F on Middle-East capacity normalization Closing14 July 2026price SGD 7.62

We believe SIA is positioned to benefit from an air freight rate surge of up to 41% y-y in

1HCY26E (according to Bloomberg) on the back of its strong presence in Southeast Asia- Implied upside -9.8%

to-Europe routes, which experienced the highest increases in freight yield during the

Middle-East conflict. We expect freight rates to ease in 2H26F as the Middle-East Market Cap (USD mn) 18,610.3

capacity normalizes, removing a key 1H earnings tailwind. ADT (USD mn) 45.4

2H26F outlook: Fuel relief overstated; cost pressures persist

Relative performance chartWhile jet fuel prices have retreated from USD233/barrel in March to USD115 by June, fuel

costs remain 33% above 2025 averages, representing a persistent headwind through the

year-end. More critically, the crack spread remains elevated at USD35 versus pre-conflict

levels of USD15, limiting hedge effectiveness despite SIA being among the region's most-

hedged operators. This elevated refining margin means that even as crude oil prices

normalize, refined jet fuel remains structurally expensive, creating a cost floor that hedging

strategies cannot fully mitigate. We believe the risk of renewed conflict pushing fuel prices

back up remains, and any geopolitical re-escalation would quickly reverse recent gains.

Singapore's tourism faces headwinds