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SINGAPORE: Singapore Airlines Ltd plans to raise more liquidity after posting its biggest quarterly loss on record as the Covid-19 pandemic decimated travel demand and charges for fuel cover and fleet deterioration weighed on its results.
The airline is in advanced talks to raise funds in the debt capital market and selling and leasing some of its jets, CEO Goh Choon Phong said during a briefing today, without elaborating.
Cash burning has fallen to about S $ 300 million a month from about S $ 350 million in the three months through July, CFO Stephen Barnes said.
The airline has already raised S $ 11.3 billion in funding through a rights and loan offer in a bid to survive the recession, and in September said it would reduce its workforce by about 20%.
Singapore Airlines reported a net loss of S $ 2.3 billion in the three months to September, as international travel practically sold out. The company expects to operate at approximately 50% of passenger capacity by the end of next year, up from 16% expected by the end of 2020.
Taking advantage of the debt market and selling and leasing rear jets should ensure the airline has “very strong” liquidity, Goh said.
“We have one of the strongest liquidity positions, if not the strongest, among airlines,” he said. The airline’s net cash and cash equivalents amounted to S $ 7.06 billion at the end of September.
Singapore Airlines may have to decide towards the end of the first quarter whether to take advantage of the S $ 6.2 billion in convertible bonds from a fundraising plan announced in March, Barnes said.
The airline’s shares fell 1.4% today. They are down 46% this year, compared with a 19% drop for the benchmark Straits Times index.
For the semester ending September 30, Singapore Airlines reflected S $ 1.3 billion in impairment charges on the disposal of 26 older aircraft after reviewing its network to determine its long-term fleet size and mix.
There were eight Boeing Co 777s, seven Airbus SE A380s, nine A320s and two A319s.
The fuel hedge contributed to a loss of S $ 563 million. In 2017, Singapore Airlines extended some of its fuel hedging contracts up to five years, from the usual 24 months.
The airline said last Friday it had halted fuel hedging activity since March given the uncertain pace of recovery.
Singapore Airlines has restarted some routes, including its direct service to New York, and plans to gradually restore flights to places like Brunei, Kathmandu and Male.
Commercial Vice President Lee Lik Hsin said last month that the airline is cautiously optimistic as governments reopen their borders for business travelers and create travel corridors.
Singapore, a small island nation that relies on international tourism and trade, is working to reopen its borders.
It is planning a travel bubble with Hong Kong that will use tests to replace the quarantine and has been opened to visitors from some countries considered low risk, including New Zealand and China.
Singapore Airlines said last week that it has created a company that offers training programs to other companies in an attempt to generate additional revenue.
