- The International Air Transport Association (IATA) recently announced that passenger traffic demand remained robust in Apr 2023. Total traffic (measured in revenue passenger kilometres (RPK)) rose 45.8% versus Apr 2022. Globally, air traffic is at 90.5% of pre-COVID levels, led by domestic traffic which has surpassed Apr 2019 levels by 2.9%. Meanwhile, international traffic rose 48.0% as compared to Apr 2022, with carriers in Asia Pacific (APAC) continuing to lead the recovery.
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- Going forward, SIA (SGX:C6L) intends to increase its capacity further to around 90% of pre-COVID levels by the end of FY24, as forward passenger sales remain robust across all cabin classes.
Risk-reward profile has become more balanced
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- We believe much of SIA’s recovery due to its first-mover advantage may have already been priced in given the recent rally in its share price, and remain cautious that SIA’s recovery momentum may begin to slow later this year.
Up fair value estimate of SIA to S$7.94
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