AIRLINE stocks are taking off again on expectation of higher passenger loads in the coming months following the end of the Iraq war and better containment of the Severe Acute Respiratory Syndrome (SARS) outbreak.
The rise in airline share prices has also been aided by improved sentiment in global equity markets.
Analysts said the recent sell-down had made airline stocks even more appealing to investors relative to other counters, against the backdrop of growing confidence that air traffic would soon pick up.
Airline shares, particularly those in Asia which were hammered in the past two months, have managed to recoup most of their losses. Some counters have rebounded more than 20% from their recent lows.
Cathay Pacific shares surged to HK$10.35 yesterday, up 23% or HK$1.95 from their recent low of HK$8.40. Singapore Airlines (SIA) has also bounced back strongly, closing yesterday at a near five-month high of S$10.60, a gain of 28% or S$2.30 from its recent low of S$8.30.
National carrier Malaysia Airlines also has fared well. It finished at RM3.90 yesterday, just a shade off its year's high of RM3.92.
In Europe, British Airways shares soared to 150p on Wednesday compared with a low of 86p recorded on March 12. Air France touched a new year's high of 11.85 euros on Monday, against its low of 7.52 euros on March 12, before easing back to 11.47 euros on Wednesday.
I think you can say the worst is over given the SARS situation now,'' SIA vice-president for marketing Huang Cheng Eng was quoted by AFX as saying.
SIA announced yesterday it was planning to restore capacity as demand picked up, after it collapsed in the wake of the SARS outbreak and the Iraq war.
An official at another airline said it would monitor the demand trend closely to determine when to resume those flights that had been cancelled following the SARS outbreak.
We are likely to do it gradually instead of raising capacity overnight. It takes a while for the public to regain confidence,'' the official said.
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