SIA

SIA: SIA has unveiled its new premium economy class, which begin on 9th Aug ’15, starting from the Singapore-Sydney route. This will be subsequently rolled out to other mid-long haul routes in 2015 to Beijing, Dubai, Frankfurt, London, Mumbai, New York, Tokyo and Zurich. Perks in the new premium economy class will include priority check-in and an allowance of 35Kg baggage weight, versus the current 30 Kg for economy class, while KrisFlyer members will secure 10% more miles than the average. Other additional features include being located in a separate cabin, wider seat space, more meal choice and better amenities compared to economy class. Analysts guides that SIA’s latest move into the new premium economy class could be a timely one, as the carrier has seen diminishing yields in recent years, weighed by rising competition, especially from Gulf carriers. The introduction of the new class would however mean an overall reduction in capacity on medium/long haul routes, although it could improve yields and profits on routes that have come under increasing pressure, while also allowing SIA to differentiate itself. Following the recent run-up in share price, SIA currently trades at 1.1x P/B. Overall, the street has 10 Buy, 8 Hold and 4 Sell ratings with a consensus TP of $11.95 on the counter.