SIA shares rally on possibility of more travel lanes being added

SIA Group’s share price has been fluctuating of late, thanks to on-again, off-again travel corridor possibilities.

  • Singapore Airlines (SGX: C6L) share price rose to S$4.96 on Wednesday (22 September)
  • Transport Minister S. Iswaran had indicated that Singapore’s Vaccinated Travel Lane network could be widened ‘in the coming weeks and months’
  • The airline’s stock, which is down 13% in the last six months, could drop further, analysts say
  • Keen to take advantage of SIA’s share price movements? Open an account with us to take a long or short position on the stock today.

SIA stock price: why is it rising?

Singapore Airlines (SIA) shares rallied as much as 2.7% this week, after Transport Minister S. Iswaran indicated that the Vaccinated Travel Lane (VTL) could soon be expanded.

On Monday, Mr Iswaran said authorities are currently working to open up the VTL to more countries ‘in the coming weeks and months’, after only one Covid-19 case was detected from 900 arrivals since the scheme started on 08 September to Germany and Brunei.

‘Several countries and regions have expressed interest in opening VTLs with Singapore,’ he stated during a Ministry of Transport commemoration event, adding that over 2,500 people have already applied to enter Singapore via the VTL.

For the SIA Group, whose passenger capacity remained well below pre-Covid-19 levels as of August at around 32%, the VTL developments will bring much-needed relief.

‘Our shareholder Temasek has supported us tremendously which gives us the funding to be able to continue on, even though the passenger side of the business continues to be very, very low,’ Lee Lik Hsin, EVP Commercial of SIA Group, told recently.

‘I think we are definitely able to ride through this crisis and also continue on with a decent network of international flights, and in that, we are among the top three leading carriers in the world in the resumption of international capacities.’

Downside potential remains high

Last week, SIA shares declined 3% after it 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 cancellations came as a result of ambiguity regarding Australia’s lifting of travel restrictions. 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.

‘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.

‘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.

The SIA stock is down some 13% in the last six months, with analysts expecting it to fall an additional 8%, based on the latest price targets published by SGX StockFacts.

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.

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