SIA CEO Goh Choon Phong

On Thursday (26 Mar), Singapore Airlines (SIA) announced that it had secured up to S$19 billion of funding with the majority coming from Temasek Holdings, to help see it through the coronavirus crisis as demands for air travel dipped.

SIA, together with other carriers around the world, are grounding planes, putting staff on unpaid leave and scrambling to raise cash to ensure their survival. So far, SIA has cut capacity by 96% and grounded almost its entire fleet.

SIA’s majority shareholder, state-fund Temasek Holdings, has indicated it would underwrite the sale of shares and convertible bonds for up to S$15 billion. The rights issue will be offered at S$3 per share, a 53.8 percent discount to SIA’s last traded price of S$6.50. DBS would also be providing SIA with a bridging loan of S$4 billion until it gets the funds from the rights issue.

“This transaction will not only tide SIA over a short term financial liquidity challenge, but will position it for growth beyond the pandemic,” Temasek International Chief Executive Dilhan Pillay Sandrasegara said.

“When these (other) airlines raise cash privately, they won’t get the kind of terms Singapore Airlines got from Temasek,” noted an analyst.

A Reuters’ journalist observed, “Temasek probably had little choice but to step in. The airline is too important to fail for a tiny city-state where the aviation industry supports more than 12% of GDP and accounts for 375,000 jobs. The equity component suggests that Singapore, a hub for the Southeast Asian region and beyond, is expecting a long and protracted downturn where profit remains elusive as border controls are slow to reopen.”

Following the announcement that Temasek would underwrite S$15 billion of shares and bonds to rescue SIA, SIA’s share price plummeted by as much as 10.1 per cent at the opening of trading on Friday (27 Mar). It finally closed at S$6.08 at the end of Friday’s trading, down from S$6.50 the previous close.

SIA CEO got $5.5 million last FY

Meanwhile, it was announced last month that SIA Chief Executive Officer Goh Choon Phong took a 15 per cent pay cut starting 1 March this month (‘SIA CEO announces 15% pay cut for himself; he earns $1.4m in salary with total package $5.5m last FY‘).

Goh’s announcement came as Deputy Prime Minister Heng Swee Keat also announced in Parliament last month that the President and all Cabinet ministers would take pay cuts too.

Goh told SIA staff, “My management team will take the lead with a salary cut effective 1 March 2020. I will take a 15 per cent cut in my salary, the executive vice-presidents will take a 12 per cent cut, and the senior vice-presidents 10 per cent.”

“The SIA board of directors have also decided to take a 15 per cent cut in their fees effective 1 March 2020 to show solidarity with the management and all staff,” he added.

According to SIA Annual Report FY2018/19, while Goh earned $1.4 million in salary or about $116K a month, his total package amounted to some $5.5 million in the last FY after including bonuses, shares and benefits.

His two Executive Vice Presidents, Mak Swee Wah and Ng Chin Hwee earned about $700-800K in salary. Their total package ranged from $2.5 to 2.75 million each.

It’s not known with the massive billion dollars of bailout coming from state-fund Temasek to assist SIA in this COVID-19 crisis, how much Goh would be getting in the ending FY this year.

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