SIA shares surge to highest since last March

Stock up 5.9% to $4.65; observers see rise as a sign of better times ahead for carrier

Singapore Airlines' (SIA) stock hit its highest level in nearly a year yesterday on anticipation that the Covid-19 vaccine roll-out and falling infection numbers worldwide portend better days ahead for the stricken carrier.

The stock gained 26 cents or 5.9 per cent to $4.65, the highest since March last year. Trading volume was high, with some 32 million shares changing hands.

Brokers attributed the sudden surge to optimism that the carrier was well positioned to come out of the Covid-19 crisis stronger.

"Actually, stocks of other airlines like Cathay Pacific, Japan Airlines, China Southern, ANA and others have already started to recover in recent weeks," said the director of one broking house. "SIA has started to move only this week."

In recent months, the Singapore carrier has seen improvement in its operating numbers.

As at December last year, it was serving 54 destinations on its passenger side and 66 cities for cargo. By end-April, it expects total passenger capacity to be at 25 per cent of pre-Covid-19 levels, and to fly to 45 per cent of the destinations it serviced before the crisis.

The airline's cargo side has been relatively busy serving the global supply chain, with vaccine shipments picking up steadily since last month.

Last week, it delivered its first shipment of Moderna Covid-19 vaccines from Brussels to Singapore on its B747-400 freighters.

Several countries, like Australia, New Zealand, Indonesia and others in South-east Asia, have tapped SIA and its cold-chain biologic facilities run by Sats at Changi for their vaccine supplies.

The financials are also showing signs of ever-so-slight quarter-on-quarter improvement.

SIA recently announced a sequential improvement in quarterly results, with a net loss of $142 million for the three months to Dec 31, compared with a net profit of $315 million for the same period in 2019.

But the latest figures were a significant improvement on the massive $2.34 billion loss in the July-September period.

The airline's balance sheet is somewhat stronger as well.

As at end-December last year, it had some $7.1 billion in cash balance. Recently, it announced the deferment of some $4 billion worth of aircraft purchases and changed the composition of new planes to be purchased in the years ahead.

With the cash balance outpacing its debt balance of $12.2 billion, debt-equity ratio fell to 0.78 times, compared with 1.27 before.

Also, with cash burn down to $250 million a month, from $300 million a month in June last year, analysts reckon the airline is well positioned to ride out the storm till late 2023.

But the crisis is by no means over and SIA is not out of the woods yet, warn industry insiders.

New strains of the pandemic are appearing in various regions and, while the current known varieties can be dealt with using existing vaccines, more resilient ones could show up later, they warn.

A version of this article appeared in the print edition of The Straits Times on February 24, 2021, with the headline 'SIA shares surge to highest since last March'. Subscribe