Singapore Airlines’ stock tops global peers on record profits

SINGAPORE – Singapore Airlines’ 32 per cent rally in the past three months tops gains among global airline stocks after it posted record profit, driven by pent-up demand.

The shares are trading at their highest level in five years, with the advance accelerating in May after the carrier reported its highest-ever annual net income as travel resumed following the Covid-19 pandemic.

The stock is the top performer on the Bloomberg World Airlines Index for the period since March 13.

It rose more than 2 per cent on Tuesday, poised for a 10th straight day of gains, its longest winning streak since 2008. Analysts see further positives for the stock, which is still 45 per cent below its all-time high set in 2000.

“Passenger traffic has yet to fully reach pre-Covid-19 levels, and seasonally higher summer travel for the Northern Hemisphere is just taking off,” said Mr Thilan Wickramasinghe, an analyst at Maybank Securities.

“Plus, there are expectations of rising travel demand from China in the second half (of the year) as the county’s reopening progresses.”

While airlines globally have seen business gradually improve since the pandemic, some investors have grown cautious on the sector overall amid high fares, threats of recession and China’s uneven recovery. Singapore Airlines’ outperformance may be in part due to perceptions of advantages over other carriers.

“SIA’s investment in premium branding – such as offering free Wi-Fi on all cabin classes – should enable it to defend market share, even as more competitor capacity takes to the air,” said Mr Wickramasinghe.

“The group was proactive in getting flight capacity online early and has better staffing strength given lower retrenchments during the pandemic.” BLOOMBERG