Singapore Airlines hunts for cash after record loss

Flag carrier in talks to raise debt and sell and lease back aircraft; may use smaller planes on some routes

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Singapore Airlines A380
(PHOTO: Shutterstock)

Use this oneSingapore Airlines (SIA) said Monday (9 November) that it was planning to raise cash through issuing debt and by selling and leasing back airplanes as it fights to stay viable in the face of the near total shutdown in international aviation due to COVID-19. The move comes after the company last Friday reported a net loss of US$2.57 billion in the six months through September.

Empty check-in counters at Singapore’s Changi Airport. (PHOTO: Shutterstock)

SIA Chief Executive Officer Goh Choon Phong broadly outlined the plans in an analyst call Monday but gave no details. The airline also said that its cash burn had fallen to about S$300 million (US$223 million) a month from about S$350 million in the three months to July. SIA has already raised S$11.3 billion in funds through a rights offering and loans, is cutting its workforce by 20 percent and opening up its training academy to outside businesses as a way to generate revenue. The company expects to operate at about 50 percent of passenger capacity by the end of next year, up from 16 percent forecast for the end of 2020. SIA may need to decide toward the end of the first quarter whether to tap the S$6.2 billion in convertible bonds from a fundraising plan announced in March, officials said.

Airlines like Singapore Air have had to ground thousands of planes. (PHOTO: Steve Strike/Outback Photographics)

Singapore Airlines has restarted some routes, including its non-stop service to New York, and plans to gradually reinstate flights to places such as Brunei, Kathmandu and Male. Vice President of Commercial Lee Lik Hsin said last month the airline is cautiously optimistic as governments reopen their borders for business travellers and create travel corridors.

The airline said in its earlier results announcement that much of its loss could be attributed to a S$1.33 billion impairment charge for older aircraft and said it would remove 26 of its 222 aircraft in its fleet. The airline said 143 of the airline’s 222 passenger and cargo aircraft are grounded and said it operated flights between Singapore and 43 destinations globally as of the end of September, up from 32 in June. The SIA Group also said it has concluded negotiations with Airbus on a revised aircraft delivery schedule incorporating deferrals for part of the aircraft on order. Negotiations with Boeing on aircraft currently on order are at an advanced stage. These outcomes will help to moderate the aircraft delivery stream in the near term, SIA said.

SIA Chief Executive Officer Goh Choon Phong (PHOTO: IATA)

Goh said he remained optimistic that new COVID-19 quick-testing regimes could allow more passenger flights to operate and pointed out to a planned “travel bubble” with Hong Kong that would allow people on both sides to travel without quarantine, stay-home notices or controlled itineraries and is “a very good example of how we can actually open up and travel in a safe manner”, he said. “All of these travel arrangements are supported by advances in testing protocols and the ability to test in the market. We believe that the continuous investment in all these test schemes and approaches would further ease travel going forward.”

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