Why are SIA shares falling?

• Singapore Airlines (SGX: C6L) share price slid to a low of S$4.85 on Thursday (16 September 2021)
• The airline was forced to cancel dozens of passenger flights to Australia this week due to a lack of clarity from the Australian government
• It also reported August 2021 operating statistics, in which passenger network remained unchanged at 67 destinations
• Feeling bullish or bearish about SIA shares? Open an account with us to go long or short on the stock.

SIA stock price analysis: what’s the latest?

Singapore Airlines shares are down by 3% this week.

On Wednesday, the national carrier was forced to cancel dozens of passenger flights to Australia scheduled from October to December, due to a lack of direction from the Australian government regarding international travel.

The group also reported its operating statistics for August 2021 on the same day. Group passenger capacity ‘remained steady’ month-on-month at around 32% of pre-Covid-19 levels for the month, while passenger network remained unchanged at 67 destinations.

The stock has fallen over 4% in the last one month, but is up by 14% year to date.

In terms of outlook, SIA shares currently have a consensus target price of S$4.56, based on the latest analyst data published by SGX StockFacts.

The price target equates to a potential 6.1% downside from its most recent price of S$4.86.

UOB analyst K Ajith reiterated a ‘sell’ call on SIA shares earlier this month while eyeing a target price of S$4.85, stating that a recovery has already been factored in.

Australian flight cancellations: ‘not enough clarity’ to operate

The Australian flight cancellations will reportedly affect some 30,000 overseas Australians who have been looking to return home since the government decided to restrict international arrivals in March 2020.

Although Prime Minister Scott Morrison indicated the possibility of reopening the country’s borders once vaccination rates hit 80% back in July, there has been a lack of commitment on this front since, with international travel restrictions still in place.

‘We’ve had to make the very difficult decision that we simply can’t operate the two additional flights that we were hoping to do into Sydney and to other ports across Australia,’ Karl Schubert, head of corporate affairs for Singapore Airlines South West Pacific, told ABC radio.

‘We just don’t have the clarity we need to have the confidence to operate.’

‘Until we receive advice from federal and state governments as to when international arrival caps will be removed, we continue to plan our operations to Australia accordingly,’ he was further quoted as saying in the Sydney Morning Herald.

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