SIA Engineering achieves positive core profitability in Q1 FY23

Excluding government support, its core profitability reached $4.2m.

SIA Engineering (SIAEC) returned to positive core profitability without government support in the first quarter of the financial year (FY 2023) at $4.2m, the first quarter it has done so since the pandemic.

In a report, UOBKayHian expects SIA Engineering’s profitability to continue improving for the rest of the financial year, driven by the increasing flight activities at Changi Airport, following a core net loss of $24.1m a year ago.

As of June 2022, the number of flights handled by SIAEC recovered to about 55% of pre-pandemic levels, it said, adding that it expects the figure to grow more to about 80% by December 2022.

UOBKayHian noted that SIAEC’s parent company, Singapore Airlines, plans to recover its passenger capacity to 81% by December 2022.

“Apart from the upbeat service volume recovery, we believe SIAEC’s relatively faster return to profitability vs other aviation plays was also attributable to its high staff retention during the pandemic, which allows SIAEC to quickly ramp up its operations to meet the air travel recovery without aggressively raising headcounts,” the report read.

It added that SIAEC’s net profit of $12.8m during the first quarter was in line with UOBKayHian’s expectations, accounting for 14% of the full-year forecast of $92m.