Weaker Near-Term Profitability for Singapore Airlines Amid a Cautious Outlook

Singapore Airlines is Singapore’s flagship carrier with a strong brand based on superior cabin service. However, the company’s dominance had been weakened in the prepandemic years by low-cost carriers and the aggressive overseas expansion of Middle East national carriers and Chinese airlines. While SIA has been building its discount brand, Scoot, the proliferation of LCCs made it difficult for SIA to maintain its market share and margins at the same time. We think the coronavirus disruption offered a temporary advantage as SIA's financial strength and well-planned staff resources enabled the carrier to bring out more flights to capture the rebound in travel demand. But with international capacity normalizing, we have seen rising competition.