Singapore Airlines Ltd plans to raise more liquidity after posting its biggest quarterly loss on record as COVID-19 decimated travel demand and charges from fuel hedging and fleet impairment weighed on its bottom line.
The airline is in advanced talks to raise funds in the debt capital market and by selling and leasing back some of its aircraft, chief executive officer Goh Choon Phong (吳俊鵬) said during a briefing yesterday, without elaborating.
Cash burn has fallen to about S$300 million (US$223 million) a month from about S$350 million in the three months to July, chief financial officer Stephen Barnes said.
The carrier has already raised S$11.3 billion in funds through a rights offering and loans in a bid to survive the downturn, and in September said it would reduce its workforce by about 20 percent.
Singapore Airlines reported a net loss of S$2.3 billion in the three months to September as international travel all but dried up.
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 this year.
Tapping the debt market and selling and leasing back planes should ensure the airline has “very strong” liquidity, Goh said.
“We have one of the strongest, if not the strongest liquidity position among airlines,” he said.
The carrier’s net cash and cash equivalent stood at S$7.06 billion at the end of September.
Singapore Airlines might 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, Barnes said.
The airline’s shares yesterday fell 1.4 percent. They are down 46 percent this year, compared with a 19 percent drop for the benchmark Straits Times Index.
For the half-year that ended on Sept. 30, Singapore Airlines reflected S$1.3 billion in impairment charges on the removal of 26 older aircraft, after reviewing its network to determine the size and mix of its fleet over the longer term. They were eight Boeing Co 777s, seven Airbus SE A380s, nine A320s and two A319s.
Fuel hedging contributed to a S$563 million loss.
In 2017, Singapore Airlines extended some of its fuel-hedging contracts to as far out as five years, from the usual 24 months.
The airline on Friday said that it had paused fuel hedging activity since March given the uncertain pace of recovery.
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.
Singapore is working to reopen its borders. It is planning a travel bubble with Hong Kong that would use tests to replace quarantine and it has opened to visitors from some countries deemed as low risk, including New Zealand and China.
Singapore Airlines last week said that it had set up a business offering training programs to other companies in a bid to generate additional revenue.
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