Singapore Airlines SIA - OCBC Research 2015-10-14: To re-launch direct flights between Singapore and U.S.

Singapore Airlines SIA - OCBC Research 2015-10-14: To re-launch direct flights between Singapore and U.S. SINGAPORE AIRLINES LTD C6L.SI 

Singapore Airlines: To re-launch direct flights between Singapore and U.S. 

  • Singapore Airlines (SIA) announced last evening that it has signed an agreement to be the launch customer for a new ultra-long-range variant of the Airbus A350 aircraft (i.e. A35-900ULR). This agreement will lift SIA’s total number of firm order for A350s to 67, of which seven will be upgraded to the A350-900ULR, plus 16 purchase options. 
  • The first A350-900 is expected to be delivered in early-2016 while the first A350- 900ULR is scheduled for delivery in 2018. The delivery of A350-900ULR in 2018 will enable SIA, in a commercially viable manner, to re-launch the world’s longest non-stop flights, between Singapore and both Los Angeles and New York. 
  • Non-stop flights between Singapore and additional points in the U.S. are also under consideration. 
  • In our view, this is certainly positive for SIA in the longer-term to regain market share of passenger traffic between Singapore and U.S., which was lost when SIA stopped such direct services since 2013. However, in the near to medium-term, we believe Gulf carriers continue to be a significant threat with aggressive expansion plans and we see pressures ahead on both yields and loads. Hence, we keep our forecasts unchanged for now. 
  • Maintain HOLD rating on SIA with FV of S$11.27. 

Eugene Chua OCBC Securities | http://www.ocbcresearch.com/ 2015-10-14
OCBC Securities SGX Stock Analyst Report HOLD Maintain HOLD 11.27 Same 11.27


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