Low fuel prices, unwinding of hedges drive upbeat view on SIA

WHILE Singapore Airlines' return to its glory days of billion-dollar profits is hard to envisage at this stage, what is clearer is that its outlook is now looking a lot more positive than it has been in recent years.

This brighter outlook has not escaped the attention of analysts.

Even amid weakening yields, a number of them see it as an attractive "buy", their reason being that low jet fuel prices and a better hedging position will bolster the bottom line.

Bloomberg data shows that 11 analysts have a "buy" call on the stock, while six have a "hold" rating and two advise selling. The average target price is around S$12.41 while the counter closed at S$11.46 on Monday.

One of the main challenges facing the SIA group today is yield erosion as the Gulf carriers continue to expand, adding capacity in lucrative markets such as Europe. In Q3, passenger yields at the group's parent airline deteriorated 4.6 per cent year on year although it did rise 5.8 p…