Is a higher rebound on the horizon for SIA?

Profit recovery relies on expensive hedges expiring.

Singapore Airlines (SIA) is hurtling towards more substantial fuel cost savings as expensive hedges expire and drive a turnaround in earnings.

According to a report by DBS, SIA is projected to consume over 40m barrels of jet fuel per year. But with jet fuel currently at US$50 (roughly $66.94) per barrel in contrast to nearly US$120 ($160.66) per barrel at end-2014, the airline will reap substantial benefits.

In line with this, SIA’s net profit is seen to rebound from $368m in FY15 to $711m in FY16. DBS further sees a 37% YoY pick-up to $976m in FY17, followed by another 8% YoY rise to $1.05b in FY18.

Meanwhile, as SIA’s profits begin to return to a normalised level, DBS believes SIA and investors could turn their focus towards the airline’s cash hoard of over $3b, or about $3.20 per share.

At the minimum, DBS opines that SIA will up the ante by raising its dividend payout to $0.50 per share in end-FY17 and end-FY18 as earnings improve.

Further upside may also come from a return of more cash in the form of special dividends or even capital reduction, as SIA has done before.

Reaching the people who run Asia's businesses is harder than it used to be.

Inboxes are crowded. Attention is short. The executives you most want to reach — the founders, CFOs, and operators who actually move budgets — are the hardest to find through the usual channels. If you're building a company, a category, or a reputation, you already know this.

We've spent twenty years building the room they read. Singapore Business Review is where senior decision makers in Singapore and across Southeast Asia come for business coverage they can't get elsewhere — in print, online, and in person at the summits and roundtables we host across seven markets.

If you have something these readers should know about — a point of view worth publishing, a product worth their attention, an event worth their time — we'd like to hear what you're trying to do.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia