Singapore Airlines Earnings: Competition Is Creeping in; Valuation Lowered by 9%

The market reaction to Singapore Airlines’ fiscal 2024 (ending March) earnings was subdued, given signs that passenger yields are beginning to compress as competition increases. However, we expect a more gradual decline in SIA’s profitability as we see costs having largely normalized and should better match revenue in the future. While full-year fiscal 2024 results aligned with our estimates, second-half revenue fell short, which was made up by better-contained costs. As a result, we lower our assumptions to reflect more intense competition, reducing our fiscal 2025 net profit forecast by 12%. Although we raise fiscal 2026-28 profit projections to reflect a more gradual decline in profitability, we lower our fair value estimate to SGD 7.80 from SGD 8.60. Overall, we expect SIA’s earnings to decline by an annual average of 11.7% over the next five years as the industry normalizes.