Singapore Airlines: Outperformance priced in; downgrade to Neutral – 1Q FY26/27 preview

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Singapore Airlines: Outperformance priced in; downgrade to Neutral – 1Q FY26/27 preview

Management pre-earnings update highlights yield strength, prudent beatrice.lam@jpmorgan.com

hedging, and network agility. Passenger and cargo yields have improved Y/ J.P. Morgan Securities (Asia Pacific) Limited/ J.P.

Y, supported by fare increases and robust demand, but yield gains may not fully Morgan Broking (Hong Kong) Limited

offset higher fuel costs. SIA’s hedging position (c.46% for 1Q, split between

MOPS and Brent) is providing a meaningful buffer, while non-fuel cost Style Exposure

inflation remains manageable. Air India remains a medium-term strategic

priority despite near-term drag, and LCC arm – Scoot –continues to deliver

strong growth and network expansion. SIA’s ability to flex capacity and

redeploy aircraft is supporting market share, but management notes the

spillover benefit from Middle East disruptions may moderate as competition

returns.

• June and YTD operational trends showcase SIA’s volume resilience and

cargo outperformance. Group passenger traffic (RPK) rose 4.1% Y/Y in

June, with capacity (ASK) up 6.0% Y/Y and PLF holding at 87.1%. Scoot’s

double-digit ASK and passenger growth continues to outpace SIA mainline,

confirming the LCC’s role in driving incremental group performance. Cargo

carriage rose 8.5% Y/Y, with a 4.2ppt surge in cargo load factor to 60.6%

despite a 2.3% Y/Y reduction in cargo capacity. The Group’s passenger and

cargo networks have expanded further, supporting both leisure/business travel

recovery and new cargo flows.

• 1Q FY26/27 preview: Core momentum holds, but Air India drag weighs

on headline. SIA’s EBIT is poised to rise 5% Y/Y, driven by solid passenger

traffic and cargo yield strength, which should offset elevated fuel costs. SIA’s