Singapore Airlines Stock Drops as Aerospace MRO and Ground Handlers Rally on STI

The Straits Times Index (STI) in Singapore recently achieved a new record high, extending a five-session winning streak.

However, the performance of key Singapore aviation stocks was mixed on the bourse. This split reflects varied investor confidence across the Singapore aerospace market.

Singapore Airlines Faces Yield Headwinds

Singapore Airlines (SIA) shares fell by 0.62 percent, closing lower despite the broader market's upward trend.

This drop highlights investor concern over profitability. The SIA Group performance shows resilient passenger traffic, but yields are weakening.

For the six months ended September 2025, SIA's revenue grew, yet net profit plunged by nearly 68 percent year-on-year.

This decline is largely attributed to losses from associated companies, including its investment in Air India.

Analysts currently hold a consensus "Sell" or "Hold" rating on the Singapore Airlines stock.

MRO and Ground Handling Drive Gains

In contrast, the aviation services sector saw strong rallies. ST Engineering (ST Engineering) spiked by 1.49 percent.

This gain is driven by the robust global engine maintenance repair overhaul (MRO) market recovery.

ST Engineering's Commercial Aerospace division is expanding its capacity for CFM56 and next-generation LEAP engines.

The company aims to exceed 400 engine shop visits annually by 2027 across its facilities in Singapore and Xiamen, China.

SATS (SATS), the ground handler and food solutions provider, also rallied by 1.30 percent.

The SATS share price is supported by the continued Asia Pacific air travel recovery.

Its acquisition of Worldwide Flight Services has made SATS one of the world's largest air cargo handlers.

This global diversification and strength in air cargo are seen as key growth factors.

Industry Outlook

The mixed results underscore a key industry trend. Investors are cautious about airline profit margins due to rising competition and costs.

However, they remain optimistic about essential support services. The MRO and ground handling sectors benefit directly from increased flight volumes and fleet utilization.

• Risk: SIA faces pressure from high competition and associated company losses.
• Opportunity: ST Engineering and SATS capitalize on high global MRO demand and cargo volume.
• Market Context: The Straits Times Index continues its upward trajectory, providing a positive backdrop for select aviation-related entities.

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