Main reasons for the quarterly loss (first since 2003 SARS crisis) were the global economic downturn, outbreak of H1N1 flu and fuel hedging losses of S$287m.
The top and bottom line fell shortof FY10 consensus estimates of S$12.35b sales and S$472.74m profit.
The price of jet fuel has fallen but still remains volatile. Hedging losses are to be expected, although it will taper off over the course of the fiscal year.
Air cargo carriage has stabilized in recent months. However, outlook for air cargo remains challenging, with yields likely to come under pressure from excess capacity.
SIA warns that if the adverse conditions continue, the group expects to make a loss for FY10. Nevertheless, net operating cash flow is expected to remain positive and cash position to remain strong. SIA does not foresee any need to raise capital.
Its main contributor of 1QFY10 profit, SATS, would be divested in August should the distribution of SATS shares in specie be approved in the EGM held today.
As of now, there are 6 BUYs, 5 HOLDsand 10 SELLs according to Bloomberg consensus rating.
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