SIA shares ascend 5% on upbeat aviation forecast

• Singapore Airlines (SGX: C6L) shares are up over 5% since Monday (08 February)
• Stocks rallied after Singapore Transport Minister Ong Ye Kung said travel and border restrictions could soon be relaxed if vaccination certifications are introduced
• The group also posted its third quarter results last week, in which passenger carriage grew 45% on a quarterly basis
• Trade SIA shares, long or short, with an IG account today

SIA share price: the latest

Singapore Airlines’ (SIA) share price has rallied over 5% since the start of the week.

Shares have been rallying on the back of increased optimism around the recovery of the aviation sector.

Civil aviation authorities could soon relax travel and border restrictions should there be vaccination certifications in place, Singapore Transport Minister Ong Ye Kung told Bloomberg Television on Monday (08 February 2021).

‘That is really the light at the end of the long tunnel,’ he said, adding that while he was hopeful about the opening of some travel corridors, he is still not ‘holding his breath’ for a V-shaped recovery in the sector.

SIA shares closed at S$4.39 on Tuesday (09 February) - up 1.39% for the day.

SIA Group’s passenger carriage grew 44.8% on quarterly basis

The group also reported its third quarter 2020/2021 financial results last Thursday (04 February).

International air travel demand remained severely constrained in the quarter, as border controls and travel restrictions continued to be in place in many countries amid new waves of the Covid-19 infection, SIA said in a press release.

As a result, the SIA Group’s passenger carriage shrank 97.6% year-on-year. When compared to the previous quarter, passenger carriage grew 44.8% on the back of a 90.8% increase in capacity for the third quarter.

Group revenue fell S$3.404 billion (-76.1%) year-on-year to S$1.067 billion during the third quarter, as all three passenger airlines within the group recorded a sharp drop in passenger flown revenue due to low traffic.

This was partially offset by improvements in cargo flown revenue, as the global airfreight capacity crunch continued to provide strong support for both load factors and yields.

For the quarter ended 31 December 2020, SIA Group reported a net loss of S$142 million, a deterioration of S$457 million against the same period a year ago.

What is the forecast for the next few months?

Looking ahead, the group said it expects to see a ‘measured expansion’ of its passenger network in the coming months, in line with Singapore’s ‘progressive re-opening’.

This is despite the resurgence of Covid-19 infections as well as the spread of more transmissible strains of the virus, which it acknowledged continues to weigh on international air travel, as border controls and travel restrictions tighten in many countries.

‘We will continue to monitor the status of travel restrictions and adjust our capacity accordingly to meet the traffic demand,’ the company said.

It noted that airfreight capacity also remains constrained due to the steep reduction in passenger flights, which has affected the global bellyhold cargo capacity.

Nevertheless, while cargo demand has tapered off after the traditional year-end peak period, strong fundamentals and healthy Purchasing Managers’ Index readings across many key export economies will continue to support cargo demand in the coming months.

The group concluded that it remains ‘well positioned to navigate the current uncertainties’.

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