SIA
SINGAPORE AIRLINES LTD
C6L.SI
Singapore Airlines: Collaboration and partnerships the way forward?
- In view of intensifying competition from expanding Gulf carriers (e.g. Emirates and Qatar Airways), we highlighted in our previous reports that forming more collaboration and partnerships may be one of Singapore Airlines’ (SIA) focus going forward.
- Recently, SIA and Tourism Malaysia entered into a two-year partnership to increase tourist flow into Malaysia, with a focus on 14 major inbound markets that include U.K., Russia, U.S., India, and China, by leveraging on SIA and SilkAir’s existing network.
- And just yesterday, SIA and SilkAir signed a codeshare agreement with Air China mainly on routes between Singapore, Beijing and Chengdu. Given SIA’s positioning in the market, we think this codeshare agreement may potentially dilute SIA’s parent airline branding and image on its Beijing flights but we also do not rule out the possibility of this agreement opening up further opportunities between the two airlines.
- All said, we still expect the cheap jet fuel to drive its earnings recovery in FY17, as the expensive hedges unwind progressively ahead.
- Maintain BUY with an unchanged FV of S$12.50.
Eugene Chua
OCBC Securities
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http://www.ocbcresearch.com/
2016-03-30
OCBC Securities
SGX Stock
Analyst Report
12.50
Same
12.50
