Among the hardest hit by the economic challenges triggered by a global pandemic, Singapore Airlines (SIA) says it is stepping up efforts in seeking fresh sources of funding and that it is confident it will have “very strong liquidity” to weather these rough times.
Chief executive officer of SIA Goh Choon Phong told reporters and analysts in a virtual briefing on Monday (9 November) that the company is in “advanced” discussions for additional sale-and-leaseback transactions of its aircrafts. He said they are also looking into tapping the debt capital markets for liquidity.
The national carrier has reported a net loss of S$3.5 billion for the first half of this year, a record low following a drastic decline in passenger numbers by 98.9% as a result of tightening border control measures and travel restrictions globally.
Mr Goh, during the briefing, stated that SIA has secured S$11.3 billion in fresh liquidity over the past six month, including S$8.8 billion raised via a rights issue and an additional S$2 billion in long-term loans of some of its aircrafts. Another S$500 million was secured through new lines of credit and a short term unsecured loan.
On top of that, the CEO said that SIA still have “largely unutilised” existing committed lines of credit amounting to S$1.7 billion.
“But we are not stopping here. We are increasing our efforts to look at more sources of raising liquidity,” said the Mr Goh.
Noting plans for more sale-and-leaseback transactions as well as opportunities in the debt capital markets, Mr Goh stressed: “With all these, we are confident that we will have very strong liquidity. In fact, we believe that we have one of the strongest, if not the strongest liquidity position among airlines.”
However, it was previously reported that S$6.2 billion of the S$8.8 billion raised from rights issues had already been used as of 3 October.
When asked about how long the current liquidity might last, the CEO said the market was “very dynamic” for a meaningful projection.
“There are all kinds of dynamics and we just have to be very nimble and flexible in responding to this, and how the market evolves would obviously also affect our operations and our cash flow,” he said, noting the possibility of further virus testing measures which might stimulate the market.
“There are just too many variables at this point in time to do any meaningful projection,” he added.
Online, however, it seems Mr Goh’s briefing was received with scepticism. On the Channel NewsAsia Facebook page, several netizens noted that the company appears to be losing more money than it can raise and wondered if the current strategy would prove effective in the long run.
On person said it is a “tough call to bank on its liquidity” given the uncertainty of the current global health crisis.
Others took a jab at the CEO himself, suggesting that he take a pay cut in order to help resolve SIA’s cash flow problems.
Mr Goh, and other management level staff, have taken a 10 to 15 percent pay cut since April/May. Pilots, however, took between 10 to 60 percent pay cuts.
Two people wondered why SIA needed to be bailed out by the government with taxpayer monies given the CEO’s statements that the company has other avenues for funding. Back in March, state investor Temasek Holdings poured in S$19 billion into SIA.