SIA raises $2 billion from airplane sale-and-leaseback deals

Singapore Airlines lacks a domestic market and has been hit hard by the virtual halt to international passenger travel.
Singapore Airlines lacks a domestic market and has been hit hard by the virtual halt to international passenger travel.ST PHOTO: KUA CHEE SIONG

SINGAPORE - In a move which will further strengthen its balance sheet, Singapore Airlines (SIA) has raised another $2 billion via the sale-and-leaseback of 11 planes.

The latest transaction brings to $15.4 billion the fresh liquidity raised by the airline since April 2020 - when the Covid-19 pandemic started ravaging global air travel.

Last year SIA raised $8.8 billion from its rights issue, $2.1 billion from secured financing, $2 billion via issue of convertable bonds and notes, and $500 million through new committed lines of credit and short-term unsecured funds.

It continues to have access to more than $2.1 billion of undrawn credit lines and the option to raise up to $6.2 billion in convertible bonds before its annual general meeting in July 2021.
SIA added that it would continue to explore other ways to raise liquidity.

The latest transaction for the sale-and-leaseback of seven Airbus A350-900s and four Boeing 787-10s planes involves four different parties - Aergo Capital, Altavair, EastMerchant/Crianza Aviation and Muzinich and Co.

“The additional liquidity from these sale-and-leaseback transactions reinforces our ability to navigate the impact of the Covid-19 pandemic from a position of strength,” SIA chief executive Goh Choon Phong said in a statement.

Faced with a pandemic which saw its passenger traffic plunge by over 95 per cent, and lacking a domestic market to take up the slack, SIA has had to turn to capital markets to keep itself afloat to ride out the crisis. And astute cash management has been a key focus of the company.

SIA used some $600 million over the first quarter - translating into a cash burn of $200 million a month. This is a significant improvement from the $350 million a month it used between April and December 2020.

Earlier this year, SIA also announced that it had deferred some $4 billion in capital expenditure by pushing back aircraft deliveries to beyond 2023 and changing the composition of its new plane orders.

While SIA’s rivals like Emirates, Cathay Pacific and Qantas have also been raising cash, industry insider believe the Singapore carrier is amongst best positioned in terms of funds raised, for now.

With passenger traffic still weak, SIA has focussed on its cargo business which is plugged into the global supply chain. More recently, it has turned its attention to transporting Covid19 vaccines to and through Singapore to countries like Australia, New Zealand, and Indonesia.

SIA shares closed at $4.95, down 11 cents or 2.17 per cent, on Monday.