Singapore Airlines Shares Fall After Quarterly Profit Miss

By Amanda Lee

Singapore Airlines shares fell in early trading after the carrier's quarterly results missed expectations, with higher costs cutting into record sales.

Shares were 9.0% lower at 6.71 Singapore dollars in early Wednesday trading, on track for their biggest one-day percentage loss since March 2020 during the early part of the Covid-19 pandemic. That trimmed year-to-date gains to 2.3%.

Singapore's flag carrier said late Tuesday that third-quarter operating profit fell 19% from a year earlier as higher fuel and other costs cut into record revenue of more than S$5 billion (US$3.72 billion). The bottom line still rose 4.9%, helped by lower taxes.

Citi analysts said profit came in 15% below consensus expectations. "We are negatively surprised" by a 14% sequential rise in fuel cost per available seat kilometers and a higher measure of ex-fuel costs, they said. They maintained a buy rating with a target price of S$7.72 but said shares could react negatively in the short term.

"While we are encouraged by strong demand guidance into [the first half of 2024] and overall passenger yield strength in [the quarter ended December]...softer-than-peers' cargo yield increases and upward cost pressures require further information from management," they wrote in a research note.

Nomura analysts Ahmad Maghfur Usman and Ankur Merchant described the results as "another strong quarter" while noting some continued lag in cargo revenue and pressures stemming from increased competition as airlines restore capacity globally.

They kept a buy rating with a S$9.17 target price, saying the stock is trading well below its historical average and its 5.0% dividend yield looks attractive.

Write to Amanda Lee at amanda.lee@wsj.com

(END) Dow Jones Newswires

February 20, 2024 22:17 ET (03:17 GMT)

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