Singapore Airlines (SIA) Stock Analysis: Upcoming Dividends and Market Outlook (April 2025)

CGS International

April 22, 2025

Singapore Airlines: Upcoming Final DPS is Key to Stock Price

Singapore Airlines (SIA) Stock Analysis

Singapore Airlines (SIA) is under review with an anticipation of its 4QFY3/25F core net profit, which is expected to be in the range of S\$200m-250m, aligning with the forecast of S\$236m core net profit. The recommendation is to “Hold” with an unchanged target price of S\$6, pegged to a P/BV of 1.1x (+1 s.d. above the mean since 2011). [[1]]

Expected Weaker Profits in 4QFY3/25F

SIA’s core net profit for Jan-Mar 2025F is projected to be between S\$200m and S\$250m. This represents an approximate 60% decrease quarter-over-quarter (qoq) compared to Oct-Dec 2024, a period marked by stronger seasonal passenger travel and airfreight demand. The rise in jet fuel prices qoq is also a contributing factor. [[1]]

Additionally, the 4QFY25F results are expected to reflect a full quarter’s share of losses from its 25% equity stake in Air India. This stake was acquired on November 12, 2024, through the sale of SIA’s 49% stake in Vistara to Air India. On a year-over-year (yoy) basis, the core net profit for 4QFY25F is expected to be approximately 60% lower. This decline is attributed to the softening of passenger airline yields over the past ten quarters due to increasing competitive pressures. The timing of Easter, moving from March 31, 2024 (4QFY24) to April 20, 2025 (1QFY26F), also plays a role, partially offset by lower jet fuel prices. [[1]]

It’s important to note that the timing of aircraft maintenance expenses can introduce volatility in quarterly earnings, potentially affecting the accuracy of estimates. [[1]]

Potential Strong Final DPS May Support Share Price

SIA is expected to declare a minimum final DPS of 20 Scts with its upcoming results announcement on May 15. This, combined with the earlier interim DPS of 10 Scts, would result in a payout ratio of 59%, which is broadly consistent with FY23’s 58% and FY24’s 56%. A final DPS of 30 Scts is pencilled in, based on the expectation that SIA might distribute some of the 37 Scts/share exceptional gain (S\$1.1bn) from the disposal of Vistara, despite the gain being non-cash in nature. [[2]]

Boeing’s ongoing 777-9 aircraft delivery delays could reduce SIA’s capital expenditure in FY26-27F by an estimated 40-45 Scts cumulatively. SIA last updated its capex guidance in November 2024 and is expected to provide an update in May 2025. A significant portion of the earlier capex guidance includes orders for 31 777-9 planes, with the initial delivery expected in late-2025F, which could be delayed to 2027F. [[2]]

In FY24, SIA declared a bumper final DPS of 38 Scts on May 15, 2024, which supported its share price until the ex-date on August 1, 2024. A similar trend is expected, with SIA’s share price remaining elevated until the final DPS ex-date, likely in late-July/early-August 2025F. The recommendation is reiterated to “Hold” with an unchanged target price of S\$6, based on a P/BV of 1.1x (+1 s.d. above the mean since 2011). [[2]]

• Upside risks: potential for sequentially better 1QFY26F results due to a decline in jet fuel prices by approximately US\$10/bbl in Apr 2024 (compared to the Jan-Mar 2025 average). [[3]]
• Downside risks: imposition of US tariffs on the rest of the world, which may weaken cargo demand from Jul 2025F and negatively impact business travel demand, potentially affecting SIA’s results from 2QFY26F onwards. [[3]]

Investment Strategy for SIA

From Present to Final DPS Ex-Date

SIA’s share price is expected to remain strong leading up to the FY25F final results announcement on May 15, 2025, driven by the expectation of a strong final DPS of 30 Scts (approximately 4.6% dividend yield). When combined with the interim DPS of 10 Scts declared on November 8, 2024, this could result in a total FY25F DPS of 40 Scts (6.2% dividend yield). Investor interest is expected to remain strong until the final DPS ex-date, potentially in late-July or early-August 2025. [[2]]

The decline in jet fuel prices by approximately US\$10/bbl (from an average of US\$90.25/bbl in Jan-Mar 2025 to US\$80.73/bbl in Apr 2025) may keep investor interest high. This decrease is attributed to market concerns about oil demand destruction due to the global trade war initiated by the US Trump administration on April 2, 2025. The drop in jet fuel prices is expected to have a slightly-lagged beneficial impact on SIA, starting from late-Apr 2025F. [[2]]

The depreciation of the US dollar from S\$1.35 in the Jan-Mar 2025 quarter to S\$1.31 could benefit SIA, given that the majority of its operating costs are denominated in US dollars. If the average price of jet fuel for FY26F is US\$81/bbl (compared to the current assumption of US\$87/bbl) and the average US\$ exchange rate is S\$1.31 (compared to the current assumption of S\$1.35), the FY26F core net profit estimate could be revised upward by approximately 20%, assuming passenger and cargo yields remain constant. [[2]]

The 90-day reprieve granted by the US Trump administration on reciprocal tariffs for many countries (excluding China) could lead to a surge in exports to the US until the reprieve ends on July 8, 2025, potentially benefiting SIA’s airfreight business. Channel checks suggest that Southeast Asian exporters have experienced a surge in factory orders for immediate deliveries to the US. The US imposed a universal baseline tariff of 10% on imports from all nations starting April 5, 2025, with additional specific tariffs on individual countries from April 9, 2025, which were suspended for 90 days. [[3]]

The US reciprocal tariff regime does not currently apply to US imports of semiconductors, electronics, and pharmaceuticals, which will be tariffed separately from May or June 2025. US importers may frontload their purchases, potentially benefiting SIA’s airfreight business. [[3]]

Effective April 5, 2025, the US reduced the threshold for formal customs processing of parcels from US\$2,500 to US\$800. As a result, DHL announced on April 20, 2025, that it is experiencing multi-day transit delays to the US for shipments with a declared customs value exceeding US\$800. DHL has temporarily suspended the collection and shipping of business-to-consumer (B2C) shipments to private individuals in the US where the declared customs value exceeds US\$800. Additionally, the US Trump administration has withdrawn the de minimis exemption for shipments of parcels under US\$800 from China and Hong Kong, with 90% tariffs applicable after May 2, 2025, and a per-postal item fee of US\$75 after May 2, 2025, rising to US\$150 after June 1, 2025. These changes are expected to negatively impact the shipment of e-commerce parcels to the US by all airfreight players. [[3]]

SIA is expected to be less negatively affected by these developments compared to North Asian air cargo companies, as the majority of packages originate in China or Hong Kong, and SIA traditionally has a smaller market share of these shipments. SIA’s cargo business is geographically diversified, with source cargoes from SE Asia and other regions, and a lower reliance on Chinese e-commerce exports. [[3]]

After the Final DPS Ex-Date

SIA’s share price is expected to weaken after the final DPS ex-date (around late-July or early-August 2025) and potentially fall by more than the quantum of the final DPS. The higher import tariffs imposed by the US against its global trading partners could lead to a decrease in global trade volume, particularly after the 90-day reprieve for US reciprocal tariffs ends on July 8, 2025, and after specific US import tariffs on semiconductors, electronics, and pharmaceutical products are introduced. This could negatively impact demand for SIA’s airfreight services. [[3]]

A decrease in airfreight volumes will likely negatively affect business travel demand, potentially hurting SIA’s passenger load factor (PLF) and yields on its business class and first-class cabins. [[3]]

While the FY26F core net profit estimate could potentially be revised higher by approximately 20% due to a downward revision in jet fuel price and US\$ exchange rate assumptions, SIA may not be able to retain these benefits for long. Competition and weakened demand for passenger and cargo services could force SIA to reduce passenger and cargo yields to support load factors. SIA’s margin expansion in 1QFY26F (Apr-Jun 2025F) due to the sudden drop in jet fuel prices and the depreciation of the US\$ may eventually be passed on to customers through reduced fares from 2QFY26F (Jul-Aug 2025F) onwards. [[3]]

No changes have been made to assumptions or earnings estimates for SIA, pending the release of its full-year results on May 15, 2025. [[3]]

SIA Group Quarterly Core Net Profit

SIA is projected to deliver a S\$200m-250m core net profit in the Jan-Mar 2025 quarter (4QFY3/25F). [[3]]

Group Passenger Airline Business

SIA group’s passenger revenue per available seat kilometer (RASK) is expected to soften in 4QFY25F to 114% of the equivalent pre-COVID level in Jan-Mar 2019, continuing the softening trend since the peak of 133% in the Jul-Sep 2022 quarter. The 4QFY25F RASK is also expected to decrease qoq compared to the seasonal travel peak in 3QFY25 (Oct-Dec 2024). [[4]]

Cargo Business

SIA’s cargo revenue freight tonne kilometers (RAFTK) improved in mid-2024 due to Red Sea shipping disruptions and the rush in e-commerce shipments to avoid expected US tariffs on Chinese imports. Despite frontloading in Mar 2025 ahead of Trump’s reciprocal tariffs (announced on April 2, 2025), SIA’s airfreight demand in 4QFY25F (Jan-Mar 2025) weakened to 88.3% of the pre-COVID level of Jan-Mar 2019, down from 91.9% in Oct-Dec 2024. [[4]]

SIA’s 4QFY25F cargo RAFTK is projected to decrease to 109% of the Jan-Mar 2019 level (from 117% in the previous quarter). This qoq decline aligns with the direction of the Baltic Exchange Air Freight Index from Hong Kong to Europe and the US. [[4]]

SIA’s cargo yields have historically been less volatile than freight rates from Hong Kong, as SIA’s cargo business is geographically diversified, with source cargoes from SE Asia and other regions, and a lower reliance on Chinese e-commerce exports. [[4]]

Singapore jet fuel prices ticked up slightly in 1QCY25, but fell by almost US\$10/bbl in the first 21 days of Apr 2025 [[5]]

Investment Strategy for SIA

From the present to the final DPS ex-date, SIA’s share price will continue to remain strong in the run-up to the FY25F final results announcement on 15 May 2025, with robust investor interest, due principally to the expectation that SIA could declare a strong final DPS of 30 Scts (c.4.6% dividend yield) when it announces its results. When added to the interim DPS of 10 Scts declared on 8 Nov 2024, it is expected that SIA could declare a total FY25F DPS of 40 Scts (6.2% dividend yield). Strong investor interest to sustain until the final DPS ex-date, which may be in late-Jul or early-Aug 2025. [[2]]

Another factor that could keep investor interest high in SIA’s shares is that jet fuel prices have declined by c.US\$10/bbl (from an average of US\$90.25/bbl in Jan-Mar 2025) to US\$80.73/bbl so far this Apr 2025, due to the market’s fears of oil demand destruction in light of the global trade war launched by the US Trump administration on 2 Apr 2025. This sharp drop in jet fuel prices to have a slightly-lagged beneficial impact on SIA, principally from late-Apr 2025F onwards, given that jet fuel is typically sold to airlines with a pricing lag. To the extent that SIA has already locked-in forward pax bookings when oil prices were higher, those bookings will likely now yield higher profits to SIA. [[2]]

The US\$ has also depreciated from S\$1.35 in the Jan-Mar 2025 quarter to S\$1.31 currently, which should benefit SIA as the majority of its operating costs are denominated in the US\$. If we factor in an average price of US\$81/bbl for jet fuel for the whole of FY26F (vs. our current assumption of US\$87/bbl) and an average US\$ exchange rate of S\$1.31 for the whole of FY26F (vs. our current assumption of S\$1.35), our FY26F core net profit estimate could potentially be revised higher by c.20%, assuming passenger and cargo yields remain unchanged. [[2]]

Furthermore, the 90-day reprieve given by the US Trump administration on the so-called reciprocal tariffs for many countries (with the exception of China) could result in a mini-rush of exports to the US until the 90-day reprieve ends on 8 Jul 2025. This temporary reprieve could benefit SIA’s airfreight business, with channel checks suggesting that various Southeast Asian exporters have received a surge in factory orders for immediate deliveries to the US. As a recap, the US imposed a universal baseline tariff of 10% on imports from all nations from 5 Apr 2025, and introduced additional specific tariffs on individual countries from 9 Apr 2025, with the latter suspended for 90 days to 8 Jul 2025. [[3]]

At present, the US reciprocal tariff regime does not apply to US imports of semiconductors, electronics and pharmaceutical from any foreign country; these will be tariffed separately from May or Jun 2025 onwards, according to US Commerce Secretary Howard Lutnick (as reported by Reuters). This which means US importers may frontload their purchases now, in our view, which could also benefit SIA’s airfreight business. [[3]]

Unfortunately, effective 5 Apr 2025, the US has reduced the threshold for formal customs processing of parcels from US\$2,500 to US\$800; as a result, DHL wrote on its website on 20 Apr 2025 that “we are experiencing multi-day transit delays to the US from any origin for shipments with a declared customs value exceeding US\$800. Effective Monday, 21 Apr 2025, and until further notice, we will temporarily suspend the collection and shipping of business-to-consumer (B2C) shipments to private individuals in the US where the declared customs value exceeds US\$800. Shipments — both B2B & B2C — with a declarable customs value below US\$800 are not affected by the suspension.” Furthermore, the US Trump administration has withdrawn de minimis exemption for shipment of parcels under US\$800 from China and Hong Kong, with: 1) 90% tariffs applicable after 2 May 2025, and 2) a per-postal item fee of US\$75 after 2 May 2025 rising to US\$150 after 1 Jun 2025. This US customs processing bottleneck for parcels above US\$800 in value, and the impending tariffs for parcels under US\$800 shipped from China and Hong Kong, will likely have a negative impact on the shipment of e-commerce parcels to the US by all airfreight players. However, we think that SIA will be less negatively affected by these developments than North Asian air cargo companies, as the majority of packages likely originate in China or Hong Kong, and SIA traditionally has had a smaller market share of these shipments than the North Asian carriers. SIA’s cargo business is geographically diversified, with source cargoes from SE Asia and other regions, with a lower reliance on Chinese e-commerce exports. [[3]]

After the final DPS ex-date, SIA’s share price to weaken after the final DPS ex-date (around late-Jul or early-Aug 2025), and to potentially fall by more than the quantum of the final DPS. This is because we expect the higher import tariffs imposed by the US against its global trading partners could cause a drop in the volume of global trade, particularly after the 90-day reprieve for US reciprocal tariffs ends on 8 Jul 2025, and after the specific US import tariffs on semiconductors, electronics and pharmaceutical products are introduced. This could negatively impact demand for SIA’s airfreight services. A drop in airfreight volumes will most likely have a negative impact on business travel demand, in assessment, and may hurt SIA’s PLF and yields on its business class and first-class cabins. [[3]]

We noted in the previous page that our FY26F core net profit estimate could potentially be revised higher by c.20%, assuming passenger and cargo yields remain unchanged, on the back of a downward revision in jet fuel price assumption and the US\$ exchange rate assumption. However, we do not believe that SIA can retain these benefits for very long, as competition and the weakened demand environment for both passenger and cargo would likely force SIA to give up those cost savings via lower passenger and cargo yields in an effort to support load factors. As a result, we think that SIA’s margin expansion in 1QFY26F (Apr-Jun 2025F) as a result of the sudden drop in jet fuel prices in Apr 2025 and the depreciation of the US\$ may eventually be given back to its customers via reduced fares from 2QFY26F (Jul-Aug 2025F) onwards. In this report, we have not made any changes to our assumptions or earnings estimates for SIA, pending the release of its full-year results on 15 May 2025. [[3]]

SIA group quarterly core net profit. We expect SIA to deliver a S\$200m-250m core net profit in the Jan-Mar 2025 quarter (4QFY3/25F) — this is marked as “225” in Figure 1. [[3]]

Group Passenger Airline Business

We expect SIA group’s passenger RASK to soften in 4QFY25F to 114% of the equivalent pre-Covid level in Jan-Mar 2019, in line with the general softening trend since the peak of 133% in the Jul-Sep 2022 quarter. The 4QFY25F RASK should also soften qoq when compared against the seasonal travel peak in 3QFY25 (Oct-Dec 2024). [[4]]

Cargo Business

SIA’s cargo RAFTK improved sequentially in mid-2024 due to Red Sea shipping disruptions and the rush in e-commerce shipments to beat the then-expected US tariffs on Chinese imports into the US during the second Trump presidential term. Despite some frontloading in Mar 2025 in anticipation of Trump’s reciprocal tariffs (announced on 2 Apr 2025), SIA’s airfreight demand in 4QFY25F (Jan-Mar 2025) weakened to 88.3% of the equivalent pre-Covid level of Jan-Mar 2019 down from 91.9% during the Oct-Dec 2024 quarter). Consequently, we expect SIA’s 4QFY25F cargo RAFTK to fall to 109% of the Jan-Mar 2019 level (from 117% in the immediately-preceding quarter). Our qoq decline projection is also in line with the direction of the Baltic Exchange Air Freight Index from Hong Kong to Europe (Fig 4) and from Hong Kong to the US (Fig 5). However, we note that SIA’s cargo yields have historically been much less volatile than the freight rates from Hong Kong, as SIA’s cargo business is geographically diversified, with source cargoes from SE Asia and other regions, with a lower reliance on Chinese e-commerce exports. [[4]]

Singapore jet fuel prices ticked up slightly in 1QCY25, but fell by almost US\$10/bbl in the first 21 days of Apr 2025 [[5]]

Historical P/BV chart

Singapore Airlines historical P/BV chart – P/BV average 2001-10 and P/BV average since 2011, and standard deviations based on those averages [[6]]

Sector comparison

Sector Comparisons [[6]]

SOURCES: CGSI RESEARCH ESTIMATES, BLOOMBERG, COMPANY REPORTS; DATA AS AT 22 APR 2025; NON-RATED COMPANIES’ ESTIMATES ARE BASED ON BLOOMBERG CONSENSUS ESTIMATES (NR COMPANIES SHOW REPORTED NET PROFIT) [[6]]

ESG Factors

SIA aims to achieve net zero carbon emissions by 2050F and is a participant in the International Civil Aviation Organization’s (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). However, LSEG awarded SIA an ESG combined score of B- due to its C- ESG controversies score. [[8]]

• SIA announced in May 2021 that it had set a target to achieve net zero carbon emissions by 2050 and that it will continue its ongoing efforts to move in this direction. [[8]]
• In order to reduce carbon emissions, SIA said it can employ three strategies: 1) reduce fuel consumption, 2) reduce the carbon intensity of its fuels, and 3) offset residual emissions by purchasing carbon credits. Neat sustainable aviation fuels (SAF) can reduce the lifecycle greenhouse gas (GHG) emissions by up to 80% compared to fossil-based jet fuel. [[8]]
• In May 2024, SIA announced that it will buy 1,000 tonnes of neat SAF from Neste’s used cooking oil refinery in Tuas, Singapore, for use in FY25; SIA will offer 1,000 carbon offset credits for sale to its corporate travellers, shippers and freight forwarders to offset the higher cost of SAF. [[9]]
• To reduce fuel consumption, SIA said it will employ various levers, such as renewing its fleet with fuel-efficient aircraft, keeping its fleet young, and increasing the operational efficiency of its flying operations. Reducing fuel consumption not only serves SIA’s ESG goals but also reduces SIA’s operational expenses and benefits the bottomline. [[9]]
• SIA plans to have neat SAF comprise 5% of its total fuel consumption by 2030. This is in line with the Singapore government’s mandate to have SAF comprise 1% of Changi Airport’s fuel consumption in 2026, rising to 3-5% by 2030. The Singapore government has mandated SAF levies on passengers from 2026 onwards to pay for the higher cost of SAF relative to traditional jet fuel. [[9]]
• Singapore has signed up for ICAO’s CORSIA scheme, which took effect on a voluntary basis from 2021 until 2026. From 2027 onwards, it will be mandatory for airlines of participating countries to offset their carbon emissions. Carbon emissions above 85% of the 2019 baseline on international flights between countries that participate in CORSIA will have to be offset from 2027. [[9]]
• In June 2021, the SIA group of airlines (SIA, Scoot, and the air freight operations) launched its Voluntary Carbon Offset Programme, which empowers travellers and cargo customers to play a part through the voluntary purchase of quality carbon offsets to mitigate the carbon footprint of their flights. [[9]]
• The SIA group generated 16.3m tonnes of Scope 1 CO2 emissions in FY20, which most closely corresponds to the 2019 base calendar year for the CORSIA scheme. Airline CO2 emissions fell to 4 mtCO2 in FY21 from the impact of Covid-19, partially recovered to 7.8 mtCO2 in FY22, and to 12.8 mtCO2 in FY23. We do not expect SIA to exceed FY20 emissions until FY25F (CY24F) or later if SIA improves its carbon efficiency and increases its use of SAF. The SIA group also made its maiden Scope 3 disclosure in FY23 at 120 mtCO2e, of which 81% comprises the well-to-tank emissions of the consumed jet fuel. [[9]]
• In its 2023 Sustainability Report, SIA noted that it has installed more than 9,000 solar panels at its offices (capacity of 4,244 MWp) which can generate 5,383 MWh of clean energy annually, with another 1,300 panels (731kWp) to be installed at the SIA Supplies Centre. [[10]]
• SIA has been the airline partner of the Hutan Harapan Initiative, an ecosystem restoration concession that covers nearly 100,000 hectares of tropical rainforest in Sumatra, Indonesia,