SIA
SINGAPORE AIRLINES LTD
C6L.SI
Singapore Airlines: Formed revenue-sharing partnership with Lufthansa
- Singapore Airlines (SIA) and Lufthansa have signed a wide-ranging partnership agreement to operate on a JV-basis, which means sharing of revenue on flights between Singapore and key Europe routes such as Frankfurt and Munich.
- The agreement will also see both airlines further their cooperation in key markets in Europe, Southeast Asia and Australia including coordination in schedules to improve connectivity and addition of more than 20 new codeshare routes.
- The agreement includes SIA’s subsidiary SilkAir, as well as Lufthansa’s subsidiaries Austrian Airlines and Swiss. Note that while some elements of the agreement will be introduced in the coming months, other elements are subjected to regulatory approvals and may be implemented progressively through CY16. Such alliance is not the first for Lufthansa as it already has JVs with other airlines such as ANA in the Germany-Japan market.
- In our view, we see this tie-up with Lufthansa positively and believe it could help SIA mitigate pressures from the fast-growing Gulf carriers.
- As this is still in its early stage, we prefer to wait as the two airlines execute their partnership agreement. Hence, we keep our forecasts unchanged and maintain HOLD on SIA with the same FV of S$11.45.
Eugene Chua
OCBC Securities
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http://www.ocbcresearch.com/
2015-11-12
OCBC Securities
SGX Stock
Analyst Report
11.45
Same
11.45
