SHARES of Singapore Airlines (SIA) : C6L 0% fell 1.8 per cent at the opening bell on Thursday (May 23), following a turbulence incident on flight SQ321 that caused one death and several injuries.
The counter, however, quickly recovered some of its losses, reinforcing analysts’ predictions that the SIA brand is unlikely to suffer significantly from the unpredictable event that is not specific to any airline.
As at the midday trading break, shares of SIA were trading down 0.7 per cent or S$0.05 to S$6.71, with 5.1 million shares changing hands.
Based on similar incidents that occurred with other airlines, analysts expected the market to react with a minimal or short-lived knee-jerk reaction.
Lorraine Tan, director of equity research in Asia at Morningstar, said the tragic incident on Tuesday would have less implication on SIA’s brand than an accident resulting from human error or faulty equipment.
Tan added that SIA’s share price has come off its 2023 highs, reducing the likelihood of further sell-offs as it has already adjusted downwards.
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Founder and chief executive of Azure Capital Terence Wong noted that the cost of compensation and a possible increase in future disaster insurance premiums are unlikely to be substantial in the grand scheme of the airline’s operational costs.
“If there is an increase in the premium, it is likely to be industrywide and not only affecting SIA,” he noted.
Besides, SIA’s actions to handle the incident have been “outstanding”, according to Shukor Yusof, founder and primary analyst at Endau Analytics. Yusof believed that the latest occurrence will not deter passengers from flying with SIA.
SIA said on Wednesday that 131 passengers and 12 crew members who were onboard flight SQ321 arrived in Singapore via a relief flight in the early morning, and an additional five passengers would be returning to Singapore on Wednesday night.
Another 74 passengers and six crew members from SQ321 remain in Bangkok, including those receiving medical care, as well as their family members and loved ones who were on the flight.
Nevertheless, general traveller confidence could take a hit as flight turbulence becomes more common and severe due to climate change, with increasing occurrence of air pockets and bad weather, said Rico Merkert, professor and chair in transport and supply chain management at the University of Sydney Business School.
“The challenge is not specific to SIA or any one airline – it affects all airlines globally, especially those operating long-haul flights over oceans,” Prof Merkert added.
