Pandemic-hit Singapore Airlines boosts coffers with plane deal

Chief executive says carrier will respond "nimbly" to evolving market conditions and is ready to capture "all possible growth opportunities" after Covid-19 crisis passes

Pandemic-hit Singapore Airlines boosts coffers with plane deal
Singapore has been keen to reopen its borders to help bolster an economy that fell into recession in 2020. In July 2020, Singapore Airlines shares fell as low as S$3.35, the lowest intraday price since 1998. Photo: Reuters

(ATF) Pandemic-hit Singapore Airlines said on Monday it had raised more than S$2 billion (US$1.5 billion) through the sale and leaseback of 11 aircraft, as the city-state's proposed travel bubble with Hong Kong hangs in the balance over new coronavirus cases.

The airline group said it has now raised more than S$15.4 billion in fresh liquidity since April 1 with S$8.8 billion from a rights issue, S$2.1 billion from secured financing, S$2 billion from the issuance of convertible bonds and notes, and S$500 million from new committed lines of credit and short-term unsecured loan.

Goh Choon Pong, chief executive, said that the additional liquidity from the sale-and-leaseback transactions reinforces SIA’s ability to navigate the impact of the pandemic.

“We will continue to respond nimbly to the evolving market conditions, and be ready to capture all possible growth opportunities as we recover from this crisis,” he said.

The aircraft comprise seven Airbus A350-900s and four Boeing 787-10s. The transactions were arranged with four different parties - Aergo Capital, Altavair, EastMerchant and Crianza Aviation, as well as Muzinich and Co.

Singapore Airlines has been hit with border controls and travel restrictions, which caused its traffic in March to fall by 90%.

DEPRESSED DEMAND

Although many key markets have started the mass roll-out of vaccinations, the recovery in international travel demand continues to remain depressed.

Year-on-year, passenger capacity at the airline group - which includes regional carrier SilkAir and budget airline Scoot - contracted by 56.3%.

Singapore has been keen to reopen its borders to help bolster an economy that fell into recession in 2020. The airline's stock lost nearly half of its value last year. In July 2020 it fell as low as S$3.35, the lowest intraday price since 1998.

The airline is counting on a travel bubble with Hong Kong due to begin on May 26, a proposal that would allow residents to travel between the two cities without quarantine.

However, on Sunday, the Singapore government acknowledged the bubble could not begin if the threshold of a seven-day moving average of five or fewer unlinked community cases in either city is breached.

Both cities are still witnessing locally transmitted cases, with Hong Kong identifying 129 cases in the 14 days to May 1. On April 22, Singapore reported 12 coronavirus cases at a migrant worker dormitory — the largest number of infections at the facilities in weeks. 

AUSTRALIA CONNECTION

In March, the airline shares jumped after the city-state said it was discussing a potential travel bubble with Australia. The south-east Asian country is also discussing mutual recognition of vaccination certificates with Australia and resuming travel by prioritising students and business travellers.

The pandemic has hit Asian airlines badly, especially those that depend on international passengers.

Hong Kong’s Cathay Pacific will slash nearly a quarter of its staff and has closed its regional Cathay Dragon brand as the airline attempts to survive the travel industry chaos brought about by Covid-19.

The city’s de facto flag carrier said the 8,500 jobs it planned to cut included 2,600 that had either already been eliminated or were vacant and would remain unfilled.

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