SIA shares skyrocket as Singapore, Australia consider air travel bubble

• Singapore Airlines (SGX: C6L) share price spiked up over 8% on Monday morning (15 March 2021)
• The rally came after Singapore’s foreign ministry said it is in discussions with Australia on the possibility of an air travel bubble
• Last week, shares also rose after the airline announced it would pilot the IATA Travel Pass digital health verification mobile app
• SIA’s share price is up nearly 9% since
• Trade SIA shares with an IG account

SIA share price: what’s the latest?

Singapore Airlines’ (SIA) shares were up by as much as 8.1% on Monday morning (15 March 2021), after Singapore’s foreign ministry said it is considering setting up an air travel bubble with Australia.

This latest rally, which saw shares hit an intraday peak of S$5.73 each, means the stock’s value has increased 8.7% in the last one week alone.

Singapore’s Ministry of Foreign Affairs (MFA) said in a press release on Sunday (14 March 2021) that the air travel bubble ‘will allow residents of Singapore and Australia to travel between both countries without the need for quarantine’.

‘Australian nationals can transit via Singapore without quarantining to return home if they travel on approved transit routes and if they comply with our public health protocols while in transit,’ the ministry noted.

MFA added that Singapore is also currently in discussions with Australia on the mutual recognition of vaccination certificates and resumption of travel with priority for students and business travellers.

SIA’s share price has dipped since, but is still trading at S$5.56 – up roughly 5% on the day.

World’s first airline to pilot digital health verification app

Last Monday (08 March 2021), SIA shares jumped over 3%, after the group announced that it would be the world’s first airline to pilot the International Air Transport Association’s (IATA) Travel Pass mobile application for digital health verification.

The initiative will launch with passengers travelling from Singapore to London from 15 March 2021 to 28 March 2021.

By consolidating the verification of health credentials into a single app, participants will gain access to a faster and more seamless check-in process.

Participants will have full control over how their personal information is shared, as the data is stored locally in the mobile phone and not in any central database. This is critical given the highly sensitive nature of health data.

If successful, the pilot will pave the way for the integration of the entire digital health verification process into the SingaporeAir mobile app from around mid-2021, again using IATA’s Travel Pass framework.

This marks the second phase of SIA’s digital health verification process trials, which is based on the IATA Travel Pass framework.

Where next for SIA shares?

In terms of stock outlook, SIA has a 12-month consensus target price of S$4.27 and rating of ‘neutral’, based on the latest data from SGX StockFacts. This is a decline from 03 March 2021's consensus target price of S$4.40.

UOB analysts on 10 March 2021 reiterated a rating of ‘hold’ and fair value estimate of S$4.47.

They wrote that SIA remains a favourite within the institutional market, as it was ‘consistently within top institution buys during the four weeks of February’.

For the month of February 2021, SIA recorded institutional buying amounting to S$133 million worth of stock and retail selling of S$193 million.

‘With the global rollout of various Covid-19 vaccines proceeding, it would appear that sentiment is in favour of aviation stocks. In addition, flows into aviation-specific ETFs, such as the US Global Jets ETF (JETS) which is a global airline ETF, may also explain part of the fund flows into the sector,’ the analysts added.

Hong Kong-listed aviation stocks such as China Southern and BOC Aviation have also seen strong share price performance in the past few weeks.

Meanwhile, CIMB on 26 February maintained an ‘add’ rating on SIA and price target of S$4.89, while OCBC also kept its ‘add’ recommendation and price estimate at S$4.80 a share.

Trade SIA stocks with IG

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