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Singapore Airlines raises S$2 billion from sale and leaseback of aircraft

Goh Choon Phong, the chief executive of Singapore Airlines has said that the additional liquidity from SLB transactions has reinforced the airline's ability to navigate the impact of the covid-19 pandemic from a position of strength. (REUTERS)Premium
Goh Choon Phong, the chief executive of Singapore Airlines has said that the additional liquidity from SLB transactions has reinforced the airline's ability to navigate the impact of the covid-19 pandemic from a position of strength. (REUTERS)

  • The transactions for 11 wide-body aircraft is expected to help the airline shore up its liquidity at a time when the industry is financial challenges arising from a decline in passenger traffic owing to the ongoing covid-19 pandemic

NEW DELHI : Singapore Airlines (SIA) has raised about S$2 billion (about $1.5 billion) from sale-and-leaseback (SLB) transactions for 11 wide-body aircraft, comprising seven Airbus A350-900s and four Boeing 787-10s, which will help shore up its liquidity at a time when airlines are facing financial challenges arising from a decline in passenger traffic owing to the ongoing covid-19 pandemic.

An SLB is a transaction in which the owner sells the aircraft, and then takes it back on lease from the buyer. Such a deal typically removes the aircraft, and its associated debt, from the carrier’s balance sheet.

"The airline has successfully raised approximately S$15.4 billion in fresh liquidity since 1 April 2020, including these SLB transactions. The amount also includes S$8.8 billion from SIA’s successful rights issue, S$2.1 billion from secured financing, S$2.0 billion via the issuance of convertible bonds and notes, as well as more than S$500 million through new committed lines of credit and a short-term unsecured loan," SIA said in a statement on Monday.

"SIA continues to have access to more than S$2.1 billion in committed credit lines, along with the option to raise up to S$6.2 billion in additional mandatory convertible bonds before the Annual General Meeting in July 2021," the statement said adding that the SIA Group will continue to explore additional means to raise liquidity as necessary.

Globally, the airline industry is expected to report losses of $47.7 billion dollars in 2021, The International Air Transport Association (IATA) said in a recent statement.

Airlines in Asia are among the worst hit by the ongoing coronavirus pandemic.

Singapore Airlines, one of Asia's largest, faces a daunting challenge to revive its operations amid the pandemic, which has resulted in muted passenger demand, especially for international travel, due to rising number of covid-19 cases and resulting restrictions imposed by several countries.

According to the latest IATA data, overall international passenger traffic plunged 89% in February compared with the same month last year owing to a surge in covid-19 infections.

“The additional liquidity from these SLB transactions reinforces our ability to navigate the impact of the covid-19 pandemic from a position of strength," said Goh Choon Phong, chief executive of Singapore Airlines.

"We will continue to respond nimbly to the evolving marketing conditions, and be ready to capture all possible growth opportunities as we recover from this crisis," he added.

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