Why are SIA shares rising?

• Singapore Airlines (SGX: C6L) share price has risen over 4% since announcing its year-end earnings last Thursday (19 May 2022)
• The group saw its net loss cut by 78% to just under S$1 billion for FY2021/2022
• Passenger carriage for the full year rose six-fold as travel restrictions ease
• Keen to trade SIA shares? Open an account with us to long or short the stock today.

SIA cuts full-year losses by S$3.3 billion

Singapore Airlines (SIA) shares continue to gain momentum this week, hitting a one-month high of S$5.53 on Tuesday (24 May 2022).

This follows the recent release of its full-year financial results, in which the SIA Group carried 3.9 million passengers in FY2021/2022, up six-fold from a year before, thanks to international air travel recovering in the last six months.

This led to a 614.9% growth in traffic (revenue-passenger kilometres), resulting in a 310% year-on-year increase in passenger flown revenue to S$2.8 billion.

Meanwhile, cargo flown revenue reached a ‘record’ S$4.4 billion, driven by strong demand amid continued capacity constraints for both sea freight and air freight.

As a result, the group's revenue doubled year-on-year to S$7.6 billion, while group expenditure grew by 30% year-on-year to S$8.2 billion.

The group consequently posted a net loss of S$962 million for the year, a 78% improvement of S$3.3 billion.

SIA stock price analysis: the latest

Last week, the group saw shares rally over 6%, after the airline reported a 62.7% month-on-month increase in passenger capacity for April 2022.

This led to the group's passenger capacity (measured in available seat-kilometres) hitting 57% of pre-Covid-19 levels in April 2022.

That same day, DBS analysts also raised their price target on the SIA stock to S$6.20 from S$4.90 previously, while upgrading a ‘hold’ call to ‘buy’, on the back of higher net profit estimates.

They noted that SIA could rebound faster than anticipated, as the lifting of regional travel restrictions continue to pick up pace.

DBS posited that SIA is likely to be the regional frontrunner as countries reopen to tourists and airlines recover. In particular, Japan’s reopening to tourists is expected to drive a significant revival in inter-region travel for the group.

The analysts also predicted that SIA’s passenger volumes could hit 70% and 96% of pre-pandemic levels by end-FY2023 and end-FY2024 respectively.

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