Singapore Airlines secures $13b rescue package to mitigate COVID-19 shock

Photo: Singapore Airlines's Facebook page

State investor Temasek Holdings and others put together a funding package of up to S$19 billion ($13.27 billion) for Singapore Airlines (SIA) in the single biggest rescue for an airline slammed by the coronavirus pandemic.

The massive financing plan, which drove SIA shares down as much as 10.5% on Friday, underscores the depth of financial trouble for the global airline industry, with nearly one-third of the world’s aircraft already grounded because of the pandemic, according to data provider Cirium.

Many governments worldwide have already stepped in to help airlines amid the virus-induced travel slump, with the United States offering $58 billion in aid. Many carriers have grounded fleets and ordered thousands of workers on unpaid leave to keep afloat.

The S$5.3 billion equity and up to S$9.7 billion convertible note portions of the Singapore Airlines fundraising are being underwritten by Temasek, which owns about 55% of the group.

The carrier has also obtained a S$4 billion bridge loan facility with the country’s biggest lender, DBS Group Holdings Ltd, to support near-term liquidity needs until the airline secures money from the rights issue.

“This is an exceptional time for the SIA Group,” SIA Chairman Peter Seah said in a statement late on Thursday.

SIA’s shares went into a rare trading halt earlier Thursday after plunging to their lowest in 22 years this week as investors feared the virus will have a deep impact on the company.

“Under the current dire circumstances, the rights issue is the best tactical move for SIA. It underscores the carrier’s strategic importance to Singapore and the island state’s position as both a financial center and aviation hub,” Shukor Yusof, head of aviation consultancy Endau Analytics, said in a blog post.

SIA has said it would cut capacity by 96%, ground almost its entire fleet and impose cost cuts affecting about 10,000 staff amid what it called the “greatest challenge” it had ever faced.

The rights issue will be offered at S$3 per share, a 53.8% discount to SIA’s last traded price of S$6.5.

“While the raising looks earnings and valuation decretive, SIA now looks well positioned to ride out the storm with balance sheet concerns largely de-risked,” BofA analysts told clients.

Temasek International Chief Executive Dilhan Pillay Sandrasegara said the deal would not only tide SIA over a short-term liquidity challenge but would position it for growth beyond the pandemic.

SIA said it would use the funding from the rights issues to beef up its capital and operational expenditure needs.

On Thursday, the Singapore government announced more than $30 billion in new measures to help businesses and households brace against the pandemic.

Finance minister Heng Swee Keat had also said that SIA would announce support from Temasek and that he welcomed Temasek’s decision to support the airline.

Qantas Airways this week secured A$1.05 billion ($636.1 million) against its aircraft fleet.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.