SIA shares slip amid Investor concerns over rise In costs

Carrier says it is well-positioned despite headwinds as competition intensifies

- Angela Tan

Singapore Airlines (SIA) shares took a hit on May 16 in the wake of investor concerns that rising costs will dent what has been a recordbreaking period for the carrier.

The stock opened at $6.90 and climbed to $6.94 in intraday trade before sliding to close at $6.73, down eight cents or 1.2 per cent for the day with 20.6 million shares changing hands.

Several analysts at a briefing on May 16 a day after the airline announced record full-year earnings - noted the challenges ahead, and projected a fall in operating profit due to pricing and cost pressures.

They expect yields to ease as the air travel industry normalises and rivals lower fares to fill seats. Costs are expected to rise with more flight restorations and new airlines launching services.

SIA chief commercial officer Lee Lik Hsin told the briefing that passenger yields had fallen over the past six months while additional capacity at other carriers would exert further pressure, raising doubts among analysts that the airline could repeat the 24 per cent growth in net profit in this financial year.

Greater pressure is expected on its low-cost carrier Scoot, where operations are largely regional.