Philippine Airlines shares soar; Skymark outlines expansion plans

Philippine Airlines and its ground crew are “closer” to an agreement that would end a labour dispute according to President Benigno Aquino. Mr Aquino stated he is “in dialogue” with the airline and its staff. PAL Holdings shares soared 19% yesterday.

Skymark outlines expansion plans

Skymark Airlines shares also gained strongly, up 5.8% yesterday, after its CEO stated the carrier would almost triple its fleet to as many as 50 aircraft over the next four years. The expansion is part of a plan to turn the Japanese LCC into an international airline. 

Hebei Aviation Investment to acquire stake in Xiamen Airlines; China Southern’s stake reduced

China Southern Airlines shares gained 1.6% yesterday in Hong Kong trading following a 3.6% reduction on 20-Dec-2010. The carrier stated Hebei Aviation Investment Group would invest CNY1.46 billion in its Xiamen Airlines Co unit for a 15% stake. The stock retreated 3.2% to CNY9.11 in Hong Kong trading. 

Also in the China market, BofA Merrill Lynch noted that there has been a heavy sell off in Chinese airline stocks in Dec-2010 adding that this situation presents “an excellent entry point to play China’s booming aviation market”. The brokerage continued that the concerns about the outlook are unjustified. Shares in the major Chinese carrier’s have declined by 18-24% in Dec-2010 but are still up by 30-80% in the full year.

Other analysts are not so optimistic. Goldman Sachs, for example, has downgraded their view on the Asia Pacific airlines sector from attractive to neutral, saying selectivity is key amid headwinds such as a likely slower traffic growth momentum, rising costs and fair stock valuations. The brokerage cut its 12-month price targets for Chinese carriers by nearly 20%.

Goldman Sachs gives ‘buy’ rating to Singapore Airlines shares

Singapore Airlines shares gained 0.9% to SGD15.32 as Goldman Sachs Group Inc reiterated its “buy” rating on the company even as it lowered its rating on the airline sector to “neutral” from “attractive”.

Cebu Pacific stated parent JG Summit Holdings purchased a further 584,240 Cebu Air shares at between PHP105.80 and PHP106.50 per share. Shares in the carrier gained 0.2% yesterday but have been down almost every day since since 07-Dec-2010 when the Philippine Board of Investments stated AirAsia plans to form a Philippines JV that will service domestic and international routes

Asia Pacific selected airlines daily share price movements (% change):  21-Dec-2010