SIA, SATS shares glide higher as Singapore eases travel curbs

• Singapore Airlines (SGX: C6L) share price soars 7.8%
• SATS (SGX: S58) jumps to S$4.38 per share
• SIA will expand its VTL flights to nine more cities
• However, an analyst warned that capacity may be insufficient
• Keen to take advantage of SIA and SATS’ rising share prices? Open an IG account to go long on both stocks now.

Upcoming VTLs boost aviation counters

Singapore’s announcement that it will launch more vaccinated travel lanes (VTLs) in the coming weeks sent shares of Singapore Airlines (SIA) and SATS soaring on Monday.

As of 11:10 SGT, flag carrier SIA was trading 7.8% higher at S$5.53, with 22.4 million shares changing hands.

Meanwhile, ground handler and in-flight catering service provider SATS’ stock price climbed about 5% to reach S$0.21 by then.

SIA shares attracted two ‘buy’, five ‘hold’, and five ‘sell’ calls from analysts as of Monday morning. Their average price target was S$4.52, Bloomberg data showed.

SATS garnered six ‘buy’ recommendations, three ‘hold’, and one ‘sell’ rating, with target prices averaging S$4.55 per share.

Credit Suisse on Monday rated SIA ‘underperform’ with a S$3.80 target, but said SATS shares could ‘outperform’ alongside a S$4.40 target.

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US, UK, Korea included in VTL scheme

Singapore on Saturday said travellers vaccinated against Covid-19 will soon be able to fly to nine more countries and return to the Republic without quarantine.

Starting from 19 October 2021, vaccinated travellers will be able to fly to the US, Britain, Canada, Denmark, France, Italy, Spain, and the Netherlands.

South Korea will also be included in the list from 15 November 2021, as announced last Friday.

VTLs have already been successfully implemented with Brunei and Germany.

However, due to a daily cap of 3,000 arrivals across the VTL scheme and the rule requiring passengers to take dedicated flights, capacity may be insufficient, even as airlines enjoy a spike in demand, The Business Times (BT) reported on Monday.

Sobie Aviation analyst Brendan Sobie told BT that flights to some destinations such as London will likely sell out more quickly. ‘Low fare and saver award seats may not be available, leaving only higher fare classes as demand exceeds the limited supply,’ he added.

SIA, Scoot to introduce more flights

After the government’s announcement, the national carrier and its budget airline unit Scoot said they will launch more routes under the VTL scheme.

Starting 19 October 2021, SIA will operate VTL flights from Amsterdam, Barcelona, Copenhagen, London, Los Angeles, Milan, New York, Paris and Rome.

These are on top of the flights from Seoul that will start on 16 November 2021.

Meanwhile, Scoot will operate VTL flights from Berlin, starting 20 October 2021.

SIA’s website was down briefly on Saturday afternoon after the upcoming travel lanes were unveiled. The group’s service centre at Ion Orchard mall also reportedly saw queues.

In a BT article, industry observer Endau Analytics opined: ‘It is some way before these journeys could significantly alter SIA's battered bottomline, but all said, it's encouraging for the airline.’

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