Airbus may compensate SIA for delay

Morgan Stanley said Singapore Airlines (SIA) may receive compensation from Airbus in the region of 200-300 mln sgd, which would be equivalent to 0.14-0.21 sgd per share, as a result of further delays in the delivery of A380 jumbo jets to the airline. Following production delays at Airbus, SIA said delivery of its first A380 is now scheduled in the fourth quarter of 2007 instead of this year.

‘While the delay is a negative for Airbus and its parent company EADS, we view it as a positive for Asian airlines, and particularly SIA, for two reasons: potential compensation by Airbus; and tightened capacity and an improved yield environment,’ Morgan Stanley told clients.

‘With falling oil prices and potential compensation from Airbus, we think SIA’s share price has upside (potential to rise) to about 17 sgd a share,’ it added.
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