Mon, Nov 09, 2020 – 1:35 PM
SINGAPORE Airlines (SIA) has yet to make a decision on whether to issue an additional S$6.2 billion worth of mandatory convertible bonds (MCBs). Neither could it say how long the carrier’s current liquidity would last, given “the market is very dynamic” now.
In an earnings call on Monday, the flag carrier’s key executives told the media and analysts that SIA is exploring additional means, including sale-and-leaseback for some of its aircraft, and further tapping the debt capital market to raise liquidity.
SIA had spent S$6.2 billion as at Oct 13 of the S$8.8 billion raised from the rights issue in June. It has not decided whether to issue another S$6.2 billion worth of MCBs. The airline has until the next annual general meeting to come to a decision.
Chief executive officer Goh Choon Phong said that “the market is very dynamic” as the coronavirus testing regime could be further improved and this could stimulate travel demand. However, he cautioned that there could also be a resurgence of infection in some countries, which could dampen demand.
Hence, he could not say when the carrier’s current liquidity would be depleted, given how changes in the market affect its cash flows.
However, SIA has managed to reduce the monthly cash burn rate from S$350 million in the period May to July, to S$300 million now. It also has credit lines of S$1.7 billion to tap.
Although it has been active in opening new revenue streams, including the recent A380 dining experience and behind-the-scenes tours of its training facilities, it is still “premature” to gauge how much these will contribute to its financials, the carrier said.
Despite the popularity of the inflight dining offerings, SIA has not decided on whether to make that permanent because it is now focused on organising the behind-the-scenes tours that will take place in the second half of November.
SIA took an impairment charge of S$1.3 billion on the retirement of 26 surplus aircraft following a network and fleet review. It expects there will not be any aircraft impairment in the near future.
SIA shares were trading at S$3.44 as at 1.17pm on Monday, down S$0.04 or 1.2 per cent.