Singapore Air Drops to 1-Month Low on New Order: Singapore Mover
Singapore Airlines Ltd., Southeast Asia’s biggest carrier, dropped to a one-month low as its $17 billion aircraft order raised concerns one of the biggest purchases in the company’s history will crimp dividends.
Singapore Air slipped 0.9 percent to close at S$10.74, the lowest since April 23. The benchmark Straits Times Index fell 0.7 percent. The company ordered 30 planes from Boeing Co. and 30 from Airbus SAS with an option to buy 20 more, the carrier known as SIA said in a statement yesterday.
“The market is somewhat spooked by the size of the order,” said K Ajith, an analyst at UOB-Kay Hian Holdings Ltd. (UOBK) in Singapore. “The market is probably worried how it’s gonna be funded and whether that would impact future dividend payout as well.”
Chief Executive Officer Goh Choon Phong is adding more planes and has upgraded business-class cabins as he faces increasing competition from Emirates and other airlines expanding in Southeast Asia. Passenger and cargo fares have fallen, pushing the company into a wider operating loss in the three months ended March 31, according to the company’s results released on May 16.
Singapore Air (SIA) had cash and near cash of about S$5 billion ($4 billion) as of March 31, compared with S$4.7 billion a year ago, according to data compiled by Bloomberg. The company allocated 71 percent of earnings as dividends in the year ended March 2013, compared with 70 percent in the previous year, the data show.
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