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Share prices take off as airlines rebound

DEMAND for travel to the Asia-Pacific region has rebounded from its descent during the global economic crisis last year, prompting airfare increases, demand for planes and healthy share prices.

On Monday, Singapore Airlines flagged it would increase ticket prices on some routes, beginning October 1. The airline also named Goh Choon Phong as chief executive officer to replace Chew Choon Seng. Its subsidiary Silk Air flies to the Kingdom.

Singapore Air share price rose 2.6 percent on the day of the announcement, to S$16 (US$11.94). Its stock price mildly fluctuated during the week, but ultimately closed unchanged at $16 in the city state’s bourse.

The planned increase in ticket price follows Korean Air, which bumped up fares for international passengers by as much as 10 percent in August, and Qantas – Jetstar Asia’s parent company – which increased its international and domestic fares on July 28 by 3 percent.

Qantas’s Jetstar said it would recruit 120 more pilots by next summer, and Singapore Airlines has set up its own tuition-free training academy with aims to graduate about 150 cadet pilots a year.

Qantas’s share price rose 3.16 percent over the week to close on Friday at $2.61 (US$2.41), also buoyed by rumours that it was one of the carriers on the radar of United Kingdom airline British Airways as a merger target.

On Monday, news reports also said regional carriers Cathay Pacific Airways Ltd, Qantas and Dubai-owned Emirates Airline, all of which fly to Phnom Penh, were awaiting deliveries of about 400 planes to capitalise on Asian demand.

Commercial airline manufacturer Boeing Co said it expected the region’s carriers to become the biggest buyers of twin-aisle planes, and its competitor Airbus SAS said Asia-Pacific airlines would buy about 8,000 planes worth $1.2 trillion over the next 20 years.

Cathay Pacific and its subsidiary Dragonair also released July passenger traffic figures on Wednesday that showed passengers were up 19.5 percent compared to 2009, with the pair carrying 2.48 million people combined.

Cathay Pacific’s share price reacted over the course of the week to rise to its highest level in almost three years in Hong Kong trading.

While Cathay’s share price rose marginally on Wednesday from HK$20.25 (US$2.60) to HK$20.30, by Thursday it had risen to HK$21.10, the highest level since November 1, 2007. It closed the week at HK$21.40 – 8.08 percent higher than its Monday opening.

The stock has risen 46 percent this year compared with a 3.2 percent decline for the Hang Seng Index.

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