The aviation sector is booming this year.
The International Air Transport Association (IATA) announced that air travel recovery for 2023 continued to edge even close to pre-pandemic levels.
For the first quarter of 2024, the International Civil Aviation Organization projects that passenger air traffic levels will be around 2% higher than in 2019.
A more recent data point from IATA showed an 11% year-on-year climb in global aviation passenger traffic for April 2024.
These numbers demonstrate the robustness of the aviation recovery which bodes well for all aviation-related companies.
Here are three Singapore-listed aviation stocks that can give you healthy exposure to this sector.
Singapore Airlines Limited (SGX: C6L)
Singapore Airlines Limited, or SIA, is Singapore’s sole airline and is the country’s flagship carrier.
The blue-chip group posted its highest-ever operating and net profit for its fiscal 2024 (FY2024) ending 31 March 2024.
Revenue rose 7% year on year to S$19 billion while operating profit inched up 1.3% year on year to S$2.7 billion.
Net profit came in at S$2.68 billion, 24% higher than a year ago.
The airline also generated a positive free cash flow of S$3.7 billion, 50% lower than the prior year’s S$7.4 billion.
SIA declared a final dividend of S$0.38, taking the total dividend for FY2024 to S$0.48.
This level of dividend was 26.3% higher than the S$0.38 paid out in FY2023.
The carrier’s passenger load factor improved by 2.6 percentage points to a record 88% with SIA reporting capacity expansion of 22.9%.
As of 1 May 2024, SIA had 89 aircraft on order, demonstrating the airline’s commitment to constantly renewing its fleet of 200 aircraft.
In addition, SIA also has 35 codeshare partners such as Air New Zealand and Garuda Indonesia covering more than 260 additional destinations.
The group announced initiatives to open up new revenue streams such as training programmes for businesses, its Krisshop e-commerce platform, and a travel experiences platform.
Its KrisFlyer membership scheme is also seeing impressive growth of 31% year on year to hit 8.8 million members for FY2024.
With the airline busy building its digital capabilities, management believes SIA is well-positioned for the future and can continue to grow both its top and bottom lines.
SIA Engineering Co Ltd (SGX: S59)
SIA Engineering, or SIAEC, is a maintenance, repair and overhaul (MRO) specialist for airlines and also provides services such as fleet management and line maintenance.
Like SIA, SIAEC also reported a strong set of earnings for FY2024.
Revenue shot up 37.5% year on year to S$1.1 billion while operating profit came in at S$2.3 million, reversing the operating loss of S$26.3 million in FY2023.
SIAEC’s share of profits from associates and joint ventures jumped 30% year on year to S$101 million, allowing its net profit to climb by 46.2% year on year to S$97.1 million for FY2024.
The group’s free cash flow also soared more than tenfold year on year from S$5 million to S$51.7 million.
A final dividend of S$0.06 was declared, slightly above the prior year’s S$0.055.
Coupled with its interim dividend of S$0.02, the total dividend for FY2024 amounted to S$0.08.
SIAEC’s Line Maintenance division saw a 39% year-on-year increase in the number of flights handled to 146,289 in FY2024.
The business also saw growth in third-party customers for FY2024.
The group intends to continue growing its in-house capabilities and will partner with original equipment manufacturers (OEMs) to expand its scope of services.
In early May, SIAEC was appointed by Air India as its base maintenance strategic partner for the development of Air India’s base maintenance facilities in Bangalore, India.
SATS Ltd (SGX: S58)
SATS is a cargo handler, ground handler and airline food caterer that also provides food solutions for food and beverage chains.
The group boasts customers in over 215 locations and 27 countries across the globe.
SATS reported a strong set of results to cap off FY2024.
Revenue nearly tripled year on year to S$5.1 billion, contributed mainly by the acquisition of Worldwide Flight Services.
Operating profit clocked in at S$244.2 million, reversing the operating loss of S$48 million a year ago.
The ground handler’s core net profit came in at S$78.5 million, a fourfold year on year increase from S$18.2 million in the prior year.
In line with the sharp improvement in its financials, SATS resumed its dividend payments, declaring a final dividend of S$0.015.
The group handled 600,000 flights for FY2024, significantly higher than the 230,000 a year ago.
54 million aviation meals were served during the fiscal year, 70% higher than the 32 million back in FY2023.
SATS’ financial goal for FY2025 is to drive profitability based on its “3R” philosophy of repaying borrowings, reinvesting its cash, and resuming dividends.
For FY2025, the group plans to repay S$200 million of loans and reinvest S$300 million of capital expenditure.
Management provided an optimistic outlook with global air passenger traffic projected to fully recover to 2019 levels by the end of 2024.
Global air cargo traffic is also forecasted to grow by 4.5% this year.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
