How should Singapore bail out SIA?

[zhihau]

adding insult to injury, they need to find and pay for storage space for oil since they basically "own" so much of it.

Were they trying to buy high sell low?

 

[eatshitndie]

Were they trying to buy high sell low?

most likely sold some below low, like negative or paying someone to take the oil.

 

[batman1]

Bring in the BG.

 

[Dr Christopher Cheok C S]

SIA had hedged 73% of its projected fuel consumption for 2021 at between US$58 per barrel for Brent crude and US$74 per barrel for jet fuel.
https://www.ig.com/sg/news-and-trad...rice-plunges-10--as-analysts-lowered-t-200327

$15billion can start another 4 Singapore airlines and 4x fleet size in times like this.

SIAS didn't dare to ask the most important question.
If the oil futures positions are not closed and mark-to-market today, $15billion will be barely enough to save SIA. Please let SIA file for bankruptcy and restructure the debts.

https://www.businesstimes.com.sg/co...out-singapore-airlines-cash-call-ahead-of-egm

 

[Dr Christopher Cheok C S]

Bring in the BG.

BG rank too low.

I recommend LG Ng Yat Chung.
In 2005, he was awarded the Knight Grand Cross (1st Class) of The Most Exalted Order of the White Elephant.

 

[laksaboy]

Why is an airline speculating in oil futures?

One of the many mysteries in Sinkieland, just like certain town councils dabbling in 'investments'.

 

[Scrooball (clone)]

It’s got nothing to do w speculation of futures.

The main issue is the flights are all grounded. How to upkeep maintenance and staff payroll ? Put them on no-pay leave can do it for how long?

 

[sleaguepunter]

Paiseh but can somebody explain current spot price can affect SIA 2021 oil futures price? 2021 still another 7-8 months.

 

[syed putra]

Why is an airline speculating in oil futures?

One of the many mysteries in Sinkieland, just like certain town councils dabbling in 'investments'.

In case oil spike up to usd100 again.
Most airlines hedge their oil needs. Some just partly. Say 50%.

 

[vamjok]

Welcome back, bro!

all the while around just that lazy to post lol

 

[garlic]

Paiseh but can somebody explain current spot price can affect SIA 2021 oil futures price? 2021 still another 7-8 months.

SIA hedged its entire FY2021 oil price, SIA's Financial year is from 1 April 2020 to 31st March 2021. Currently, they hedged 80% of their total oil requirements of brent crude @ $76/barrel. That means they are paying $76/barrel, and April price was $20.56, thus suffering a loss of $55.44 per barrel, multiply by the number of barrels they purchased, one will get the loss for their long contracts. However, airlines will also hedge against their long positions by shorting. Even though SIA hedged their oil prices at $76/barrel, they would almost certainly have a comparable amount of short positions to protect from oil volatility, so that the losses, if any do not extend too large. What oil price will be from June onwards all the way to March 2021 is anyone's guess, but SIA's overall position is long, so even with their short contracts, when oil price drop, overall they make losses on their bets, just a question of how much. If the whole world starts driving and starts flying very soon, oil price starts climbing, then all is good...

Usually, with normal operational capacity, oil prices volatility is not that material, but when capacity is cut by more than 90%, it becomes significant. SIA's is one of the rare airlines that hedge multi-year, up to five years.. currently, their oil hedge contracts extend to FY2023 at between $53 to $59 per barrel. According to SIA:

"In addition, the scale of the flight cuts means that the SIA Group is now in an over-hedged position with respect to fuel consumption. Surplus hedges will need to be marked to market as at 31 March 2020, a date on which the Brent oil price was close to its 10-year low, and are expected to generate substantial losses. "

 

[eatshitndie]

SIA hedged its entire FY2021 oil price, SIA's Financial year is from 1 April 2020 to 31st March 2021. Currently, they hedged 80% of their total oil requirements of brent crude @ $76/barrel. That means they are paying $76/barrel, and April price was $20.56, thus suffering a loss of $55.44 per barrel, multiply by the number of barrels they purchased, one will get the loss for their long contracts. However, airlines will also hedge against their long positions by shorting. Even though SIA hedged their oil prices at $76/barrel, they would almost certainly have a comparable amount of short positions to protect from oil volatility, so that the losses, if any do not extend too large. What oil price will be from June onwards all the way to March 2021 is anyone's guess, but SIA's overall position is long, so even with their short contracts, when oil price drop, overall they make losses on their bets, just a question of how much. If the whole world starts driving and starts flying very soon, oil price starts climbing, then all is good...

Usually, with normal operational capacity, oil prices volatility is not that material, but when capacity is cut by more than 90%, it becomes significant. SIA's is one of the rare airlines that hedge multi-year, up to five years.. currently, their oil hedge contracts extend to FY2023 at between $53 to $59 per barrel. According to SIA:

"In addition, the scale of the flight cuts means that the SIA Group is now in an over-hedged position with respect to fuel consumption. Surplus hedges will need to be marked to market as at 31 March 2020, a date on which the Brent oil price was close to its 10-year low, and are expected to generate substantial losses. "

to be fair, no one can predict ccp virus to wreck such unmitigated havoc on the global economy. the hedge at between $53 to $59 per barrel up to 2023 is pretty good imo, much better than the average of $69 per barrel over 6.9 years before wuhan whore strikes. of course at this moment till perhaps 2023, the price of oil will have a problem recovering as it will take at least another 6.9 years for the world economy to recover, and my best bet is around $36.9 per barrel from 2021 through 2023.

 

[Dr Christopher Cheok C S]

16 SIA Singapore-based staff tested positive for COVID-19 in March and April

https://sg.style.yahoo.com/16-sia-singaporebased-staff-have-covid-19-internal-memos-120152011.html

 

[Dr Christopher Cheok C S]

By the way, I think SIA's uniform is quite outdated, very ugly. Hope they will restructure and wear something nicer.

 

[Dr Christopher Cheok C S]

The Oracle of Omaha said yesterday said there is no future in airlines, while we are spending over $15bn + $4bn and more to bail out SIA.

Berkshire Hathaway Inc sold its entire stakes in the four largest U.S. airlines in April, Chairman Warren Buffett said Saturday at the company’s annual meeting, saying “the world has changed” for the aviation industry.
https://www.reuters.com/article/us-berkshire-airlines-idUSKBN22E0VP

 

[Dr Christopher Cheok C S]

 

[Dr Christopher Cheok C S]

Temasek is interested in virgin Atlantic (owned by Delta and Virgin group)
https://www.dealstreetasia.com/stories/temasek-virgin-atlantic-stake-187977

 

[Dr Christopher Cheok C S]

SIA's Mandatory Convertible Bonds (MCBs) Rights are almost worthless now. Looks like Temasek have to swallow all of them.

 

[batman1]

BG rank too low.

I recommend LG Ng Yat Chung.
In 2005, he was awarded the Knight Grand Cross (1st Class) of The Most Exalted Order of the White Elephant.

Desmond Kuek also qualify.

 

[syed putra]

Temasek is interested in virgin Atlantic (owned by Delta and Virgin group)
https://www.dealstreetasia.com/stories/temasek-virgin-atlantic-stake-187977

SIA used to own minority shares in virgin atlantic. They sold it after not getting the money's worth.


SIA dumps Virgin Atlantic stake
STAFF WRITER 12 DECEMBER 2012
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Global - Singapore Airlines (SIA) has agreed to sell its 49% stake in UK-based Virgin Atlantic to Delta Air Lines for US$360million.
Under the agreement, Delta will pay US$360 million in cash for SIA's entire shareholding in the UK-based airline group.
According to SIA, Virgin had not "performed to expectations and the synergies the parties originally hoped for have not materialised". The sale would result in a profit being booked in Singapore Airlines' accounts, added SIA.
Subject to approvals by regulators in Europe and US, the transaction is expected to close in the fourth quarter of 2013.
Commercial arrangements between Singapore Airlines and Virgin Atlantic including codesharing, frequent-flyer programme ties and reciprocal lounge access will remain in place after the divestment, added SIA.
SIA first acquired 49% of Virgin Atlantic in March 2000. Meanwhile, the partnership is expected to give Georgia-based Delta Airlines a greater presence at the London Heathrow airport and offer competitive advantage on flight routes between North America and the UK.
Sir Richard Branson told the BBC that it was an "exciting day" in Virgin's history. "It signals the start of a new era of expansion, financial growth and many opportunities for our customers and our business," he said.
SIA has been in the process of re-evaluating its business, launching long-haul budget airline Scoot and making aggressive moves for the Australian market. It earlier acquired 10% in Virgin Australia, one of the market's biggest players, looking to capitalise on the high volume of domestic flights in the country.
Both the Virgin Atlantic sale and the buying of Virgin Australia's stake are separate deals for SIA, with both businesses being run separately.

SIA bought the stake for usd966mil.