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Singapore Airlines has spent 70% of the US$4.6 billion in fresh capital raised last June
October 23rd 2020
Singapore Airlines (SIA) said this week it was taking a prudent and proactive approach to liquidity as it disclosed S$6.2 billion (US$4.6 billion), or 70%, of the $8.8 billion in fresh capital it raised in June has been spent. Read More »
The company's financial disclosures to the Singapore Exchange showed SIA spent $1.8 billion between August 15 and October 13: $600,000 on operating expenses, $500,000 on ticket refunds and $700,000 paying down debt that included "repayment of funds previously drawn under certain lines of credit thereby restoring their availability as sources of liquidity".
The $1.8 billion news followed previously announced spending of $4.4 billion between June and August, bringing the total spent to $6.2 billion.
SIA said it had used the proceeds of the rights issue to repay a $2 billion loan from DBS Bank, $200,000 for aircraft payments and $500,000 for the redemption of its 10-year fixed rate note.
"While international air travel continues to be affected by the pandemic, the company will continue to be prudent and proactive in managing its liquidity," SIA said.
In addition to the $8.8 billion rights issue, SIA raised more liquidity through $2.1 billion in long-term loans secured against aircraft and short-term loans. There also was $1.9 billion available through lines of credit.
SIA said it had the potential to raise up to $6.2 billion more in funds through the issuing of mandatory convertible bonds, "if the crisis prolongs".
The airline group, Singapore Airlines, SilkAir and Scoot, said in its monthly traffic report published this week demand for air travel remained soft amid border controls and strict travel restrictions countries have put in place to curb COVID-19.
Available Seat Kilometres (ASK), or capacity, was at 9.2% of 2019 levels in September and demand was an anaemic 1.9% of pre-COVID-19 levels.
The three carriers flew 42,600 passengers in September, down 98.6% from 3.12 million in same month last year. Passenger load factor of 17.2% was 67.8 percentage points lower than 84.8% a year earlier.
SIA has foreshadowed group capacity could reach 15% of pre-COVID-19 levels by the end of December 2020.
In other SIA news, the airline announced it would resume nonstop flights between Singapore and New York, starting on November 9.
Unlike its previous nonstop flight to New York, which was suspended due to the pandemic, SIA will serve JFK Airport rather than Newark Liberty Airport in neighbouring New Jersey.
The route is the longest in the world by distance at 8,287nm to JFK and 8,285nm to Newark.
There also has been a schedule change, with the SQ23/24 rotation to operate as an overnight flight in both directions. Previously, only the Singapore-New York leg was an overnight service, with the return flight departing Newark in the morning.
SIA said it would use a three-class A350-900 on the route with a configuration of 42 business, 24 premium economy and 187 economy seats instead of its ultra-long haul A350-900ULR which had 67 business and 94 premium economy seats.
The predicted low demand for seats, at least in the short term, and the expectation the flight would be in demand from a cargo point of view, is likely to be behind the choice of aircraft.
"SIA anticipates significant cargo demand from a range of industries based in the New York metro area, including pharmaceuticals, e-commerce and technology firms," SIA said.
"The new service will provide the only non-stop air cargo link from the U.S. Northeast to Singapore, which serves as a regional distribution hub for many major U.S.-based companies."
New York will be SIA's second nonstop route to the U.S. from Singapore, alongside its nonstop service to Los Angeles. All other destinations in the U.S. – Houston, San Francisco and Seattle – remain suspended due to COVID-19.
SIA is due to release its interim 2020- 2021 financial results on November 6.
