News
Singapore Airlines chairman says group positioned to capture post-COVID-19 growth
July 3rd 2020
Singapore Airlines (SIA) chairman, Peter Seah, said this week a recent capital raising had provided the company with the breathing space to weather the coronavirus pandemic and emerge stronger in its aftermath. Read More »
In June, SIA raised S$8.8 billion (US$6.3 billion) through a rights issue of $5.3 billion from an offering of new shares and $3.5 billion from the sale of mandatory convertible bonds (MCB).
The group also secured $900 million in long-term loans secured against some of its A350-900s and 787-10s, and $500 million from new committed lines of credit and a short-term unsecured loan with several banks.
SIA also has shareholder approval to raise another $6.2 billion through the sale of more MCBs to July 2021.
Writing in the company's annual report, published this week, Seah said SIA had responded decisively since the onset of COVID-19. At a practical level, the airline group had taken all precautionary steps to protect customers and staff on the ground and in the air.
It also had sought to reduce costs, with staff placed on unpaid leave, aircraft grounded as the network was shrunk to a skeleton schedule, projects were deferred and contracts with suppliers renegotiated.
A shorter work month for all ground staff is in place, among other measures, the chairman wrote.
Seah said the capital raising reinforced the airline group's liquidity. "This allows Singapore Airlines to be in a position of strength to capture medium to long-term growth beyond COVID-19," he said in the annual report.
COVID-19 had crippled global aviation but it also had re-shaped the aviation industry, Seah said. "The group will continue to act nimbly in response to evolving market conditions and reaffirm its leadership position in target markets with a focus on long-term profitability in the post-COVID-19 world."
Seah reaffirmed SIA's commitment to its portfolio strategy that covered both its full-service and low-cost airlines, Singapore Airlines, SilkAir and Scoot, and its multi-hub proposition, referring to the company's joint venture, Vistara, in India.
SIA's transformation program, that began in 2017, had yielded more than 100 business initiatives, "strengthened the group’s revenue generating capabilities and driven operational efficiencies while maintaining the high SIA service standards", Seah said.
The SIA group has set up a task force to evaluate its options post-COVID-19, including inflight products and end-to-end service delivery to enable delivery of additional health and safety assurances to passengers and staff.
"The next phase of transformation will see the group taking a fundamental relook at our current business operating model with a post-COVID-19 lens, strengthening our operational resilience and ensuring we lead the new world as we emerge from the crisis," Seah said.
Elsewhere in its annual report, SIA said there was "no visibility on the timing or trajectory of the recovery at this point", given there were few signs of abatement in the COVID-19 pandemic.
As a result, the airline group planned to maintain minimum flight connectivity within its network while having the flexibility to scale up capacity should signs emerge of a lift in demand.
Meanwhile, demand for essential goods such as medical supplies, pharmaceuticals and fresh foods was still greater than air freight capacity in many markets due to the sharp reduction in belly-hold capacity from the large-scale cancellation of passenger flights. This was expected to sustain cargo revenues for the near term, SIA said.
