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SINGAPORE: Singapore Airlines (SIA) is intensifying its efforts to seek new sources of funds and is confident that it will have “very strong liquidity” to overcome the turbulence induced by the pandemic.
Speaking to analysts and reporters at a virtual earnings meeting on Monday (November 9), CEO Goh Choon Phong said SIA was in “advanced” discussions for more sale and leaseback transactions for its aircraft.
The national carrier, which last week reported a record net loss for the first half of fiscal 2021 amid the COVID-19 pandemic, is also looking to further tap into debt equity markets for liquidity.
READ: SIA plans to use smaller jets for Singapore-Hong Kong air travel bubble
SIA, Goh said, secured S $ 11.3 billion in new liquidity in the past six months.
This includes the S $ 8.8 billion raised through a rights issue and another S $ 2 billion secured by long-term loans secured on some of its aircraft. New committed lines of credit and a short-term unsecured loan also provided additional liquidity in the amount of around S $ 500 million.
Furthermore, the airline still has existing committed credit lines worth S $ 1.7 billion which are “largely unused at this time”.
“But we will not stop here. We are increasing our efforts to seek more sources of obtaining liquidity, ”said the CEO.
Citing plans for further sale and leaseback transactions and assessment of opportunities in the debt equity markets, Mr. Goh added: “With all of this, we are confident that we will have very strong liquidity. In fact, we believe we have one of the strongest liquidity positions, if not the strongest, among airlines. “
In response to a question about its option to raise an additional S $ 6.2 billion in additional mandatory convertible bonds, SIA Executive Vice President of Finance and Strategy Tan Kai Ping said no decision has been made.
The airline has until the next annual general meeting to make a decision.
READ: The Big Read: Shot Down by COVID-19, Can SIA Fly Again? The fate of the Singapore Aviation Center depends on it
SIA, like many other airlines around the world, has been wasting money due to a pandemic that has paralyzed the aviation industry.
Last Friday, the company announced a record net loss of S $ 3.47 billion for the first half of fiscal 2021. It bled S $ 2.34 billion in the second quarter alone, doubling from the first quarter and marking its biggest quarterly loss. .
The losses came as the company continued to see passenger numbers plummet due to the pandemic and charges for deterioration of older aircraft.
As it battles the biggest crisis in its history, SIA has grounded much of its fleet and cut 4,300 jobs, or about 20 percent of its staff. The latter cost the group S $ 42 million, it said in its latest earnings report.
It was previously reported that the airline spent S $ 6.2 billion of the S $ 8.8 billion raised from the rights issue as of October 13.
When asked how long the trader’s current liquidity could last, Goh said the market was “too dynamic” at the moment to make meaningful projections.
He noted how the prospect of further improvements to coronavirus testing regimens could stimulate the market, but the risk of a resurgence of the infection remains in some countries, potentially slowing any recovery in travel demand.
“There are all kinds of dynamics and we just have to be very agile and flexible to respond to this, and the way the market evolves would obviously affect our operations and our cash flow as well,” he said.
“There are too many variables at the moment to make a meaningful projection.”
SIA said it has managed to reduce its monthly cash spending to “less than S $ 300 million,” down from S $ 350 million a month in the three months from May to July.
The airline has also been looking for new revenue opportunities, such as home delivery of its onboard meals, allowing customers to dine on a SIA A380 aircraft and tour its training facilities.
READ: Over 400 people dine on parked Singapore Airlines planes as part of the A380 restaurant experience
READ: SIA sees ‘overwhelming demand’ for training center tour
Earlier this month, he also said that he would establish a Singapore Airlines Academy to teach courses for other companies.
But since these are “relatively new companies,” it would be “premature” for SIA to provide projections on how much they will contribute to its finances, Goh said.
He also hasn’t decided yet whether to make onboard meal deals a permanent fixture, as he now wants to focus on behind-the-scenes tours that take place later this month.
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