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SIA will also be running out of cash soon
- Thread starter LITTLEREDDOT
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Changi Airport also raised $$$ today
https://www.bondsupermart.com/bsm/a...nces-10-year-sgd-bond-at-2-00-ipg-RCMS_228760
I guess they got killed by Jewel.
https://www.bondsupermart.com/bsm/a...nces-10-year-sgd-bond-at-2-00-ipg-RCMS_228760
I guess they got killed by Jewel.
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U obviously know nothing about the airline business. The freight boom is here to stay. So, should SQ pay $120 million for a freighter aircraft or take some of the ones they are not using right now and convert them for a few million dollars? BTW they don't convert the planes, ST does it.
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And get their @rse handed to them in the process?
The whole world will sanction eunuch loong, already in a pandemic. More than 50% not fit for service.
Teeny tiny dot sized demoralized entity led by eunuch loong.
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SIA needs an additional $6.2 billion most of which will come from the citizens' reserves through Temasek
SIA reported a record net loss of $4.27 billion for the financial year ended March 31.PHOTO: ST FILE
May 19, 2021
SINGAPORE - The Singapore Airlines (SIA) Group has reported a record net loss of $4.27 billion for the financial year ended March 31 after "its toughest year in history", it said on Wednesday.
The SIA Group, which includes national carrier SIA, regional arm SilkAir and budget carrier Scoot, said that successive waves of Covid-19 infection and more virulent strains over the past 12 months had caused unprecedented conditions for air travel.
Group revenue fell by 76.1 per cent on a yearly basis to $3.82 billion due to the plunge in passenger flown revenue across its airlines.
However, this was partially offset by higher cargo flown revenue, which rose by $758 million or 38.8 per cent year-on-year to $2.71 billion.
SIA noted that based on their current published schedules, the group expects the passenger capacity to be around 28 per cent of pre-Covid levels by June 2021.
As such, it will undertake a further issuance of additional mandatory convertible bonds to raise gross proceeds of approximately $6.2 billion.
"The issuance will allow the SIA Group to maintain a strong equity base and provide it with additional options moving forward to raise further debt financing as necessary," it added.
SIA Group posts $4.3 billion loss after 'toughest year in history'
SIA reported a record net loss of $4.27 billion for the financial year ended March 31.PHOTO: ST FILE
May 19, 2021
SINGAPORE - The Singapore Airlines (SIA) Group has reported a record net loss of $4.27 billion for the financial year ended March 31 after "its toughest year in history", it said on Wednesday.
The SIA Group, which includes national carrier SIA, regional arm SilkAir and budget carrier Scoot, said that successive waves of Covid-19 infection and more virulent strains over the past 12 months had caused unprecedented conditions for air travel.
Group revenue fell by 76.1 per cent on a yearly basis to $3.82 billion due to the plunge in passenger flown revenue across its airlines.
However, this was partially offset by higher cargo flown revenue, which rose by $758 million or 38.8 per cent year-on-year to $2.71 billion.
SIA noted that based on their current published schedules, the group expects the passenger capacity to be around 28 per cent of pre-Covid levels by June 2021.
As such, it will undertake a further issuance of additional mandatory convertible bonds to raise gross proceeds of approximately $6.2 billion.
"The issuance will allow the SIA Group to maintain a strong equity base and provide it with additional options moving forward to raise further debt financing as necessary," it added.
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It would be many, many times cheaper to shut down SIA and re-start SIA after the pandemic is over.
It costs $50 - $200m to start a small airline. With the $3 billion-plus that had already been pumped into SIA and another $6 billion more needed, Temasek can halved that ($5 billion) and restart a massive airline business from scratch.
Even Umbrage Ng has not lost so much money.
Bad decisions, patriotism, ego (not admitting wrong), not losing face is costing Singapore citizens $10 billion-plus.
It costs $50 - $200m to start a small airline. With the $3 billion-plus that had already been pumped into SIA and another $6 billion more needed, Temasek can halved that ($5 billion) and restart a massive airline business from scratch.
Even Umbrage Ng has not lost so much money.
Bad decisions, patriotism, ego (not admitting wrong), not losing face is costing Singapore citizens $10 billion-plus.
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Tomorrow start to short.
The parent company have cash.
IF they start a new airline and place retired PAP Ministers / Elites as CEO or Chairman to achieve "operations integrity",it will be a fiasco.
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SIA CEO Goh Choon Phong is talking cock.
Any company with access to a lot of funds will be well-armed to emerge stronger. Just like Umbrage Ng, he is lucky to be working in a company owned by Temasek that happily supports its portfolio companies.
Investors would have been better off if they had sold the shares at the start of the pandemic.
And he is misleading investor by saying normality will return with vaccine passports. Ong Ye Kung already said that vaccine passports is not a free pass to travel abroad easily.
SIA seems well capitalised to meet its needs for at least two years ahead.ST PHOTO: KUA CHEE SIONG
Ven Sreenivasan
Associate Editor
May 20, 2021
SINGAPORE - Despite having gone through its worst year in history, Singapore Airlines remains confident that, with access to a flush of funds, it is well armed to emerge as a competitive premium carrier when the pandemic recedes.
Chief executive Goh Choon Phong said the cash and resources his airline had access to would ensure that it remains flexible and nimble enough to compete when normality returns.
"Underlying travel demand is actually very strong, as we saw from booking when the Singapore-Hong Kong travel bubble was announced," he said.
"But the virus situation is beyond our control. Nevertheless, we are optimistic that with the ongoing vaccine roll-out, and with vaccine passports, travel will return. We are looking forward to calibrated border openings in the months ahead. And when that happens, we will be ready."
Indeed, armed with $7.8 billion in cash, access to $2.1 billion untapped credit and now raising $6.2 billion in mandatory convertible bonds, the company seems well capitalised to meet its needs for at least two years ahead.
SIA's chief financial officer Steven Barnes revealed that cashburn had fallen from about $350 milliona month a year ago to $250 million a month by February this year. It is now in the region of $100 million to $150 million per month.
"We expect cashburn to stabilise at these levels for now, although that picture can change depending on the fuel market conditions," he said.
SIA senior officials were addressing questions from media and analysts on Thursday (May 20), a day after the airline reported a record $4.3 billion loss as passenger traffic plunged 98 per cent during the Covid-19-stricken financial year ending March 31, 2021. Full-year revenue fell 76 per cent to $3.8 billion, from a record $15.9 billion a year earlier.
They pointed out that much of the losses were non-cash impairments, including $1.73 billion on impairment on aircraft, $497 million on ineffective fuel hedges and $36.9 million on write-off of assets at SIA Engineering.
Cargo operations remained a bright spot for SIA during the challenging year, thanks to active e-commerce, pharmaceuticals and electronics supply chains.
Mr Goh indicated that cargo would continue to lead as capacity utilisation steadily inches up towards 32 per cent of pre-Covid levels by July this year.
"While cargo demand remains robust, passenger demand will not be a smooth upward trajectory. New infections can flare up anywhere. But we now know that people who have been fully vaccinated are unlikely to be badly impacted, and this is leading many countries to do calibrated border openings."
Meanwhile, the airline is pushing ahead with its business transformation plan and strategic initiatives such as the merger of the main liner SIA and its regional carrier SilkAir, and supporting the expansion of its India-based associate Vistara. It is also aggressively pushing its popular KrisShop franchise into the e-commerce arena.
Mr Goh revealed that Vistara had been operating at 80 per cent of pre-Covid levels prior to the current pandemic flare-up.
He added that India, China and South-east Asia would remain key markets for SIA, and the airline would continue to build opportunities in these geographies. It will also strengthen alliances with partners like Lufthansa, Scandinavian Air and Air New Zealand. Other alliances it was working on prior to Covid-19 were with Malaysia Airlines and ANA of Japan.
Addressing a question on the mandatory convertible bonds, Mr Barnes said that on maturity, these will be converted to shares. But SIA will have to pay interest and recognise this payment in its books only if it decides to redeem them at some stage.
On its fleet plans, Mr Goh said fleet renewal will remain a priority in order to ensure the airline always has the newest and most fuel-efficient planes. He added that the airline would be retiring seven of its 19 A380 super-jumbos.
The remaining 12 planes would be put to good use, he said.
Any company with access to a lot of funds will be well-armed to emerge stronger. Just like Umbrage Ng, he is lucky to be working in a company owned by Temasek that happily supports its portfolio companies.
Investors would have been better off if they had sold the shares at the start of the pandemic.
And he is misleading investor by saying normality will return with vaccine passports. Ong Ye Kung already said that vaccine passports is not a free pass to travel abroad easily.
Access to cash, resources means SIA ready to compete when normality returns, says its CEO
Ven Sreenivasan
Associate Editor
May 20, 2021
SINGAPORE - Despite having gone through its worst year in history, Singapore Airlines remains confident that, with access to a flush of funds, it is well armed to emerge as a competitive premium carrier when the pandemic recedes.
Chief executive Goh Choon Phong said the cash and resources his airline had access to would ensure that it remains flexible and nimble enough to compete when normality returns.
"Underlying travel demand is actually very strong, as we saw from booking when the Singapore-Hong Kong travel bubble was announced," he said.
"But the virus situation is beyond our control. Nevertheless, we are optimistic that with the ongoing vaccine roll-out, and with vaccine passports, travel will return. We are looking forward to calibrated border openings in the months ahead. And when that happens, we will be ready."
Indeed, armed with $7.8 billion in cash, access to $2.1 billion untapped credit and now raising $6.2 billion in mandatory convertible bonds, the company seems well capitalised to meet its needs for at least two years ahead.
SIA's chief financial officer Steven Barnes revealed that cashburn had fallen from about $350 milliona month a year ago to $250 million a month by February this year. It is now in the region of $100 million to $150 million per month.
"We expect cashburn to stabilise at these levels for now, although that picture can change depending on the fuel market conditions," he said.
SIA senior officials were addressing questions from media and analysts on Thursday (May 20), a day after the airline reported a record $4.3 billion loss as passenger traffic plunged 98 per cent during the Covid-19-stricken financial year ending March 31, 2021. Full-year revenue fell 76 per cent to $3.8 billion, from a record $15.9 billion a year earlier.
They pointed out that much of the losses were non-cash impairments, including $1.73 billion on impairment on aircraft, $497 million on ineffective fuel hedges and $36.9 million on write-off of assets at SIA Engineering.
Cargo operations remained a bright spot for SIA during the challenging year, thanks to active e-commerce, pharmaceuticals and electronics supply chains.
Mr Goh indicated that cargo would continue to lead as capacity utilisation steadily inches up towards 32 per cent of pre-Covid levels by July this year.
"While cargo demand remains robust, passenger demand will not be a smooth upward trajectory. New infections can flare up anywhere. But we now know that people who have been fully vaccinated are unlikely to be badly impacted, and this is leading many countries to do calibrated border openings."
Meanwhile, the airline is pushing ahead with its business transformation plan and strategic initiatives such as the merger of the main liner SIA and its regional carrier SilkAir, and supporting the expansion of its India-based associate Vistara. It is also aggressively pushing its popular KrisShop franchise into the e-commerce arena.
Mr Goh revealed that Vistara had been operating at 80 per cent of pre-Covid levels prior to the current pandemic flare-up.
He added that India, China and South-east Asia would remain key markets for SIA, and the airline would continue to build opportunities in these geographies. It will also strengthen alliances with partners like Lufthansa, Scandinavian Air and Air New Zealand. Other alliances it was working on prior to Covid-19 were with Malaysia Airlines and ANA of Japan.
Addressing a question on the mandatory convertible bonds, Mr Barnes said that on maturity, these will be converted to shares. But SIA will have to pay interest and recognise this payment in its books only if it decides to redeem them at some stage.
On its fleet plans, Mr Goh said fleet renewal will remain a priority in order to ensure the airline always has the newest and most fuel-efficient planes. He added that the airline would be retiring seven of its 19 A380 super-jumbos.
The remaining 12 planes would be put to good use, he said.
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'Vaccine passports' not a free pass to travel abroad easily: Ong Ye Kung
Countries will have to come to an agreement to recognise the vaccine certificates issued by their counterparts before travel will be allowed.ST PHOTO: KUA CHEE SIONG
Rei Kurohi
MAY 18, 2021
SINGAPORE - Having proof of vaccination, or so-called vaccine passports, will not give people a free pass to travel abroad easily, said Health Minister Ong Ye Kung during a press conference on Tuesday (May 18), in response to a media query.
Ultimately, countries will have to come to an agreement to recognise the vaccine certificates issued by their counterparts before travel will be allowed, he added.
Mr Ong was responding to a question about whether Singapore has plans to introduce vaccine passports as a condition for travelling in or out of the country.
"I always felt that the concept of a vaccine passport is actually a bit of a misnomer," the minister said at a press conference held by the multi-ministry task force on Covid-19, which he co-chairs.
"It gives you the impression that, as with a passport, you can travel to many places. It actually wouldn't work like that."
Explaining how it would work, he said two different regions would assess each other's risk profile, and if it is similar, will form an air travel corridor, like the air travel bubble between Singapore and Hong Kong.
The travel bubble, which will allow quarantine-free travel between both cities, was originally slated to start on Nov 22 last year, but was pushed back to May 26 this year.
It has now been postponed a second time, following a recent spike in Covid-19 cases in Singapore.
Mr Ong said such an arrangement starts with both sides recognising each other's vaccine certificates, after determining that vaccination is carried out using good vaccines and under well-supervised conditions in both places.
Then, both sides will have to decide on policies like whether the quarantine period should be done away with or cut short, among other things.
"What is more likely is a two-step process. Number one, mutual recognition of vaccine certs; and number two, what to do with those vaccine certs, and you confer the appropriate restriction relaxations," he added.
Meanwhile, Singapore and Hong Kong have said they would monitor the public health situation and decide on the new launch date of the air travel bubble.
The authorities are expected to make an announcement towards the end of phase two (heightened alert), which will remain in place until at least June 13.
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SIA needed $15.4 billion last year in 2 rounds of fund-raising.
It is raising $6.2 billion this year. It will need another round of fundraising to raise another $7.2 billion later this year.
That will be a total of $30.8 billion down the drain, most of which is citizens' reserves (managed by a private company Temasek Holdings).
$30.8 billion just to keep one airline afloat.
This is enough to start two airlines and two budget airlines from scratch.
Singapore Airlines has raised $15.4 billion in fresh liquidity since April 1 last year.PHOTO: ST FILE
Ven Sreenivasan
Associate Editor
Jun 1, 2021
SINGAPORE - Singapore Airlines (SIA) had sought and obtained overwhelming shareholder support to raise funds through its mandatory convertible bonds (MCB) and rights share issues – funds that the airline said will put it on a strong footing to re-emerge as a global player as the Covid-19 pandemic recedes and borders reopen.
The company was responding to a series of questions put to it last week by the Securities Investors Association (Singapore), or Sias.
"SIA sought and obtained strong shareholder support for the additional MCBs at the April 2020 extraordinary general meeting, with 99.66 per cent of shareholders approving the resolution," the airline said in a response issued via the Singapore Exchange on Tuesday (June 1) morning.
"This was subsequently renewed at the July 2020 annual general meeting (AGM), where 99.76 per cent of shareholders approved the resolution to issue the additional MCBs before the next AGM in July 2021."
The company raised $5.3 billion via rights shares and $3.5 billion via MCBs last year.
It wants to raise another $6.2 billion via MCBs this year before its AGM in July.
While the rights issue was well subscribed, the MCB met with tepid response, resulting in substantial shareholder Temasek subscribing to the bulk of it, a point that was raised by Sias last week.
As the shareholders had voted for the fund raising, it was their prerogative to decide if they would subscribe to the MCBs, subject to their own financial circumstances, said SIA.
In all, SIA has raised $15.4 billion in fresh liquidity since April 1 last year.
This includes the $8.8 billion in rights shares and MCB last year and another $6.6 billion through bond issues, secured financing and sale and leaseback transactions.
Besides the $6.2 billion in fresh liquidity that it hopes to raise through the latest MCBs, it also has $2.1 billion in untapped lines of credit on top of all the other funds raised.
Because the MCBs are considered equity, SIA has more headroom for further debt financing going forward, if needed.
SIA said the proceeds would strengthen its financial foundations to meet ongoing financial commitments, allow it to make the necessary investments and capitalise on any opportunities that may arise so as to secure its industry-leading position, as well as provide resources for growth as it navigates through the ongoing crisis.
"The successful implementation of the group's strategy is also dependent on its ability to retain its talented and motivated employees, and to continue having a strong employer brand to attract new talent," said SIA.
It added that it had a pipeline of new-generation aircraft - Airbus A350s and Boeing 787s - on order that it could use for further secured financing and sale and leaseback transactions.
The airline expects the proceeds to last well through its 2022/2023 financial year.
It added: "Since the beginning of the Covid-19 pandemic crisis, our monthly operating cash burn has dropped to the current levels of around $100 million to $150 million per month, from around $350 million at the start of the pandemic.
"We will continue to pursue reduction in cash burn through revenue generation (for example, strong cargo revenue and gradual improvement in passenger flown revenue through more flying activities). In addition, we will continue to maintain stringent cost management."
Turning to Sias' question of whether SIA would consider privatisation, the company said: "Privatisation is not a matter for SIA to consider as it is a shareholder action. Accordingly, SIA is not in a position to comment."
But analysts told The Straits Times that if privatisation were ever to be contemplated - which is unlikely - such an exercise could be done only with the approval of majority shareholder Temasek.
SIA said it was grateful to all shareholders, including retail investors, for their strong support over the years and especially since the start of the Covid-19 pandemic.
"Our goal is to provide long-term value for shareholders by ensuring that the company returns to profitability and remains a leader in the airline industry as we navigate the challenges posed by the Covid-19 pandemic," it said.
It is raising $6.2 billion this year. It will need another round of fundraising to raise another $7.2 billion later this year.
That will be a total of $30.8 billion down the drain, most of which is citizens' reserves (managed by a private company Temasek Holdings).
$30.8 billion just to keep one airline afloat.
This is enough to start two airlines and two budget airlines from scratch.
SIA says it is well capitalised, has no delisting plans
Ven Sreenivasan
Associate Editor
Jun 1, 2021
SINGAPORE - Singapore Airlines (SIA) had sought and obtained overwhelming shareholder support to raise funds through its mandatory convertible bonds (MCB) and rights share issues – funds that the airline said will put it on a strong footing to re-emerge as a global player as the Covid-19 pandemic recedes and borders reopen.
The company was responding to a series of questions put to it last week by the Securities Investors Association (Singapore), or Sias.
"SIA sought and obtained strong shareholder support for the additional MCBs at the April 2020 extraordinary general meeting, with 99.66 per cent of shareholders approving the resolution," the airline said in a response issued via the Singapore Exchange on Tuesday (June 1) morning.
"This was subsequently renewed at the July 2020 annual general meeting (AGM), where 99.76 per cent of shareholders approved the resolution to issue the additional MCBs before the next AGM in July 2021."
The company raised $5.3 billion via rights shares and $3.5 billion via MCBs last year.
It wants to raise another $6.2 billion via MCBs this year before its AGM in July.
While the rights issue was well subscribed, the MCB met with tepid response, resulting in substantial shareholder Temasek subscribing to the bulk of it, a point that was raised by Sias last week.
As the shareholders had voted for the fund raising, it was their prerogative to decide if they would subscribe to the MCBs, subject to their own financial circumstances, said SIA.
In all, SIA has raised $15.4 billion in fresh liquidity since April 1 last year.
This includes the $8.8 billion in rights shares and MCB last year and another $6.6 billion through bond issues, secured financing and sale and leaseback transactions.
Besides the $6.2 billion in fresh liquidity that it hopes to raise through the latest MCBs, it also has $2.1 billion in untapped lines of credit on top of all the other funds raised.
Because the MCBs are considered equity, SIA has more headroom for further debt financing going forward, if needed.
SIA said the proceeds would strengthen its financial foundations to meet ongoing financial commitments, allow it to make the necessary investments and capitalise on any opportunities that may arise so as to secure its industry-leading position, as well as provide resources for growth as it navigates through the ongoing crisis.
"The successful implementation of the group's strategy is also dependent on its ability to retain its talented and motivated employees, and to continue having a strong employer brand to attract new talent," said SIA.
It added that it had a pipeline of new-generation aircraft - Airbus A350s and Boeing 787s - on order that it could use for further secured financing and sale and leaseback transactions.
The airline expects the proceeds to last well through its 2022/2023 financial year.
It added: "Since the beginning of the Covid-19 pandemic crisis, our monthly operating cash burn has dropped to the current levels of around $100 million to $150 million per month, from around $350 million at the start of the pandemic.
"We will continue to pursue reduction in cash burn through revenue generation (for example, strong cargo revenue and gradual improvement in passenger flown revenue through more flying activities). In addition, we will continue to maintain stringent cost management."
Turning to Sias' question of whether SIA would consider privatisation, the company said: "Privatisation is not a matter for SIA to consider as it is a shareholder action. Accordingly, SIA is not in a position to comment."
But analysts told The Straits Times that if privatisation were ever to be contemplated - which is unlikely - such an exercise could be done only with the approval of majority shareholder Temasek.
SIA said it was grateful to all shareholders, including retail investors, for their strong support over the years and especially since the start of the Covid-19 pandemic.
"Our goal is to provide long-term value for shareholders by ensuring that the company returns to profitability and remains a leader in the airline industry as we navigate the challenges posed by the Covid-19 pandemic," it said.
Last edited:
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Garuda will not be the only airline facing restructuring or rescheduling of debts.
Garuda Indonesia's finances have been under serious strain with a negative cashflow of about US$100 million a month and ballooning debt.PHOTO: REUTERS
JUN 3, 2021
JAKARTA (REUTERS) - National flag carrier Garuda Indonesia will seek a suspension of debt payments to creditors and lessors under a "standstill agreement" in order to avoid bankruptcy, a senior government official said on Thursday.
The coronavirus pandemic has put the state-controlled airline's finances under serious strain with a negative cashflow of about US$100 million a month and ballooning debt, Kartika Wirjoatmodjo, Indonesia's deputy minister of state-owned enterprises (SOEs), told a parliamentary hearing.
The carrier needed a "fundamental restructuring" to reduce its debt to around US$1 billion to US$1.5 billion, from US$4.5 billion currently, to continue as a going concern, he said.
"We are appointing legal and financial consultants to begin this process and we must immediately conduct a moratorium (of debt repayments) or a standstill in the near term," Mr Kartika said.
"Because without a moratorium, it will run out of cash in a very short time," he added.
Mr Kartika said the process will be complicated by having parties within and outside Indonesia, including holders of its US$500 million Islamic bonds (sukuk) in the Middle East, with risks of disagreements leading to legal problems.
"We hope that 270 days after the moratorium, we can conclude the restructuring," Mr Kartika said, warning failure to reach a quorum "could lead to bankruptcy and this is what we're trying to avoid". Garuda previously extended the maturity of its sukuk, due last June, by three years after a drop of passenger volume during the pandemic.
There was also an 8.5 trillion rupiah (S$787.3 million) government bailout via a convertible bond sale in 2020, but Mr Kartika said the finance ministry halted payments after just one trillion rupiah because Garuda did not meet some covenants.
The deputy minister said Garuda's finances were already strained before the pandemic, with higher-than-normal leasing costs for a fleet that includes planes made by four different manufacturers.
Its international routes were also unprofitable, Mr Kartika said.
On Wednesday, SOEs minister Erick Thohir told reporters Garuda will focus on serving domestic routes during the restructuring process.
Garuda's chief executive Irfan Setiaputra declined to comment.
In a stock exchange filing last week, Garuda said it was negotiating with all lenders and lessors to mitigate insolvency risks and developing its cargo business to improve revenue.
Garuda Indonesia to seek suspension of debt payments to avoid bankruptcy
Garuda Indonesia's finances have been under serious strain with a negative cashflow of about US$100 million a month and ballooning debt.PHOTO: REUTERS
JUN 3, 2021
JAKARTA (REUTERS) - National flag carrier Garuda Indonesia will seek a suspension of debt payments to creditors and lessors under a "standstill agreement" in order to avoid bankruptcy, a senior government official said on Thursday.
The coronavirus pandemic has put the state-controlled airline's finances under serious strain with a negative cashflow of about US$100 million a month and ballooning debt, Kartika Wirjoatmodjo, Indonesia's deputy minister of state-owned enterprises (SOEs), told a parliamentary hearing.
The carrier needed a "fundamental restructuring" to reduce its debt to around US$1 billion to US$1.5 billion, from US$4.5 billion currently, to continue as a going concern, he said.
"We are appointing legal and financial consultants to begin this process and we must immediately conduct a moratorium (of debt repayments) or a standstill in the near term," Mr Kartika said.
"Because without a moratorium, it will run out of cash in a very short time," he added.
Mr Kartika said the process will be complicated by having parties within and outside Indonesia, including holders of its US$500 million Islamic bonds (sukuk) in the Middle East, with risks of disagreements leading to legal problems.
"We hope that 270 days after the moratorium, we can conclude the restructuring," Mr Kartika said, warning failure to reach a quorum "could lead to bankruptcy and this is what we're trying to avoid". Garuda previously extended the maturity of its sukuk, due last June, by three years after a drop of passenger volume during the pandemic.
There was also an 8.5 trillion rupiah (S$787.3 million) government bailout via a convertible bond sale in 2020, but Mr Kartika said the finance ministry halted payments after just one trillion rupiah because Garuda did not meet some covenants.
The deputy minister said Garuda's finances were already strained before the pandemic, with higher-than-normal leasing costs for a fleet that includes planes made by four different manufacturers.
Its international routes were also unprofitable, Mr Kartika said.
On Wednesday, SOEs minister Erick Thohir told reporters Garuda will focus on serving domestic routes during the restructuring process.
Garuda's chief executive Irfan Setiaputra declined to comment.
In a stock exchange filing last week, Garuda said it was negotiating with all lenders and lessors to mitigate insolvency risks and developing its cargo business to improve revenue.
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Can SIA tahan until 2024?
Will need another $15 billion each year in 2022 and 2023.
That is a total of $60 billion over four years (2020 - 2023).
Most of it is the citizens' monies (through Temasek).
Quote: "Countries with a sizeable domestic travel market are expected to see a rebound in tourism levels earlier."
SIA - die....
eople at a pier in Santa Monica, California, on May 29, 2021. Countries with a sizeable domestic travel market are expected to see a rebound in tourism levels earlier. PHOTO: AFP
Adeline Tan
Jun 4, 2021
SINGAPORE - Global tourism could recover to pre-pandemic levels only by 2024, with some countries expected to recover faster than others.
Management consulting firm McKinsey & Company made this prediction based on various global tourism recovery scenarios which examine the impact of virus containment, as well as the economic and policy responses of the 10 countries with the biggest outbound tourism markets.
Global business leaders have agreed that the most likely scenario involves recovery to 2019 levels by 2024.
On Thursday (June 3), Ms Diaan-Yi Lin, a senior partner at McKinsey, said the 2024 prediction comes with certain assumptions.
"What we have seen is continued pockets of virus resurgence. Therefore, mobility restrictions are quite extensive, whether it is social distancing or lockdowns... and we do expect some lasting changes in travel behaviour," said Ms Lin at the Asia-Pacific Council for Hotels, Restaurants and Institutional Educators virtual conference, which was organised by hospitality school Shatec.
According to McKinsey, annual tourism expenditure in the 10 countries with the biggest outbound tourism markets was US$4 trillion (S$5.3 trillion) in 2019.
An 8 per cent increase from pre-pandemic levels to US$4.3 trillion is expected in 2024.
Leisure travel is expected to fully recover due to factors such as vaccinations, said Ms Lin, adding that as much as 20 per cent of the business travel segment may not recover.
She explained: "I think this pandemic has forced every business to use technology and realise that working remotely is possible... We expect many of those working practices to stick."
Countries with a sizeable domestic travel market are also expected to see rebound in tourism levels earlier.
For example, China could see recovery in its domestic market as early as 2022, followed by Japan and Germany in 2023.
In China and Japan, recovery is driven by a fast and effective response to the Covid-19 pandemic, while in Germany, it is attributed to its strong healthcare system and economy.
Will need another $15 billion each year in 2022 and 2023.
That is a total of $60 billion over four years (2020 - 2023).
Most of it is the citizens' monies (through Temasek).
Quote: "Countries with a sizeable domestic travel market are expected to see a rebound in tourism levels earlier."
SIA - die....
Global tourism could recover to pre-pandemic levels only by 2024: Experts
eople at a pier in Santa Monica, California, on May 29, 2021. Countries with a sizeable domestic travel market are expected to see a rebound in tourism levels earlier. PHOTO: AFP
Adeline Tan
Jun 4, 2021
SINGAPORE - Global tourism could recover to pre-pandemic levels only by 2024, with some countries expected to recover faster than others.
Management consulting firm McKinsey & Company made this prediction based on various global tourism recovery scenarios which examine the impact of virus containment, as well as the economic and policy responses of the 10 countries with the biggest outbound tourism markets.
Global business leaders have agreed that the most likely scenario involves recovery to 2019 levels by 2024.
On Thursday (June 3), Ms Diaan-Yi Lin, a senior partner at McKinsey, said the 2024 prediction comes with certain assumptions.
"What we have seen is continued pockets of virus resurgence. Therefore, mobility restrictions are quite extensive, whether it is social distancing or lockdowns... and we do expect some lasting changes in travel behaviour," said Ms Lin at the Asia-Pacific Council for Hotels, Restaurants and Institutional Educators virtual conference, which was organised by hospitality school Shatec.
According to McKinsey, annual tourism expenditure in the 10 countries with the biggest outbound tourism markets was US$4 trillion (S$5.3 trillion) in 2019.
An 8 per cent increase from pre-pandemic levels to US$4.3 trillion is expected in 2024.
Leisure travel is expected to fully recover due to factors such as vaccinations, said Ms Lin, adding that as much as 20 per cent of the business travel segment may not recover.
She explained: "I think this pandemic has forced every business to use technology and realise that working remotely is possible... We expect many of those working practices to stick."
Countries with a sizeable domestic travel market are also expected to see rebound in tourism levels earlier.
For example, China could see recovery in its domestic market as early as 2022, followed by Japan and Germany in 2023.
In China and Japan, recovery is driven by a fast and effective response to the Covid-19 pandemic, while in Germany, it is attributed to its strong healthcare system and economy.
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- Jul 25, 2008
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Irresponsible spending.
While most businesses would exercise caution and cut or reduce capital expenditure, SIA is taking a big gamble by buying more planes to benefit from the "impending" recovery.
SIA can do this only because they know they have a major shareholder with deep pockets (Temasek) that is obliged to keep supporting SIA.
But Temasek's money is ultimately the citizens' money.
Commentary: Why is SIA taking delivery of 28 new planes this financial year amid Covid-19?
By BRENDAN SOBIE
Published JUNE 03, 2021
TODAY file photo
Singapore Airlines has long had one of the industry’s most aggressive fleet modernisation programmes, rolling over nearly its entire fleet every 15 years.
Most Southeast Asian airline groups have cut aircraft deliveries to a trickle in order to reduce expenditure and capacity amid extremely weak market conditions.
However, Singapore Airlines (SIA) Group is a major exception and plans to take delivery of 28 new aircraft in its current fiscal year which runs from April 1, 2021 to March 31, 2022.
SIA has long had one of the industry’s most aggressive fleet modernisation programmes, rolling over nearly its entire fleet every 15 years.
On average it took delivery of about 22 new aircraft per annum in the five fiscal years prior to the pandemic.
So the 28 new planes it plans to take delivery of in the current fiscal year has raised some eyebrows, given the current environment and how competitors have responded to the pandemic by delaying most new aircraft deliveries.
Why is SIA making such a move and what are the implications for the company?
In a typical year, SIA Group typically takes around 15 per cent of all commercial aircraft delivered in Southeast Asia and is the region’s third largest recipient of new aircraft after AirAsia Group and Lion Group.
However, in the year ending March 2022, SIA will likely account for over half of all commercial aircraft delivered in Southeast Asia.
AirAsia Group, which was initially planning to take over 50 aircraft in 2021, has suspended all deliveries while Lion Group, which had similarly ambitious fleet plans prior to the pandemic, will take only a few new aircraft.
Several other airline groups in Southeast Asia are not planning to take delivery of any new aircraft over the next year.
While deliveries have plummeted globally, there has been a bigger than average decline in Southeast Asia for both 2020 and 2021 due primarily to the massive cutbacks by AirAsia Group and Lion Group.
AirAsia has not taken any aircraft since the start of the pandemic while Lion has taken just two aircraft.
SIA was able to delay some of its deliveries in the previous financial year to the current one, but these were generally less significant in terms of number of aircraft and length of deferrals compared to its competitors.
In February, SIA also announced the completion of renegotiations with Airbus and Boeing, resulting in aircraft deliveries being spread out over more years than initially scheduled.
However, these deferrals are generally less significant compared to those by other airline groups in Southeast Asia.
In a November 2020 commentary for TODAY, I had cautioned how it was more difficult for SIA to renegotiate with aircraft manufacturers, leasing companies and other suppliers than other Southeast Asian airline groups due to SIA’s much stronger financial position.
I pointed out how unlike its competitors, SIA lacked the bargaining power of a distressed company on the verge of collapse.
Suppliers have been relying on SIA to make good on its pre-pandemic commitments, resulting in SIA indirectly subsidising other airline groups in the region that are unable to pay their bills or take delivery of aircraft they had committed to prior to Covid-19.
While some competitors have reduced aircraft capital expenditure to nearly zero, SIA is still spending S$3.7 billion in aircraft capital expenditure for this financial year.
The S$2.8 billion SIA spent on aircraft capital expenditure in the last financial year was also significantly more than many of its regional competitors.
SIA was able to reduce aircraft capital expenditure over the two year period by 38 per cent compared to its original pre-pandemic spending plan but this is a much smaller reduction compared to most competitors.
Aircraft expenditure is a major component of SIA’s massive recapitalisation programme, which has already raised S$15.4 billion since the start of the last financial year, with another S$6.2 billion to be raised from the mandatory convertible bonds the group announced on May 19 it will exercise.
Of the additional S$6.2 billion, S$2.7 billion is set aside for capital expenditure — mainly for aircraft and aircraft-related payments.
Aircraft capital expenditure does not entirely correlate to current year deliveries as a large portion is spent on pre-delivery payments for aircraft that are slated to be delivered in later years.
New aircraft that are being sourced from leasing companies rather than directly from the manufacturers are also excluded from capital expenditure.
Of SIA Group’s 28 slated deliveries in the current fiscal year, 10 are from leasing companies. These are all A321neos for budget airline subsidiary Scoot, the first two of which were delivered in late May.
The other 18 deliveries are sourced directly from the manufacturers. This includes eight 737 MAX 8s and seven 787s from Boeing and three A350-900s from Airbus, all of which are slated to be delivered over the last 10 months of the current fiscal year.
GLOOMIER OUTLOOK
Beyond the current fiscal year, SIA Group has outstanding orders for another 119 aircraft, including 52 from Airbus and 67 from Boeing, that will be delivered over the next several years.
SIA’s fleet currently consists of 176 aircraft but around 50 are not in service — including six 737 MAX 8s that have not operated since March 2019, when the model was grounded globally following two crashes, while the remainder have been grounded for commercial reasons since the start of the pandemic.
SIA may reactivate the 737 MAX, which has already returned to service in other regions, later this year contingent on Singapore and other Asian countries lifting their grounding orders.
SIA plans to gradually bring back its other grounded aircraft, including 12 of its A380s, over the next few years as the market recovers.
In addition to temporarily grounding aircraft, SIA has accelerated the retirement of 45 aircraft since the start of the pandemic, which ensures SIA’s fleet will remain below pre-pandemic levels despite all the new deliveries.
However, the 45 accelerated retirements are not that significant as most were already slated to be phased out over the next few years.
Unlike other more ambitious airline groups, most new aircraft received by SIA have traditionally been used to replace existing aircraft rather than support growth.
SIA’s overall fleet modernisation strategy remains unchanged despite the pandemic, which so far has led to a 98 per cent reduction in passenger traffic.
The group’s steadfast commitment to invest in new aircraft technology, which enables efficiency and product improvements, is certainly noteworthy.
However, to take 28 aircraft in a span of 10 months is not ideal given the bleak short term outlook.
SIA Group passenger traffic was less than 4 per cent of pre-Covid levels in April and will likely remain at about this level through at least the first half of this financial year.
While international travel is starting to resume in other regions, particularly for vaccinated passengers, borders in the Asia Pacific remain closed and aspirations for a partial reopening over the next few months through air travel bubbles or other initiatives have been set back by the new waves of cases that have emerged in several Asian countries.
For the calendar year, SIA Group will likely carry between one and two million passengers in 2021, representing a decline of at least 95 per cent compared to the 38 million carried in 2019.
The outlook has become gloomier since the beginning of this year, when I stated as part of this January 2021 commentary that SIA would likely carry in 2021 slightly fewer than the seven million passengers the group transported in 2020.
SIA ideally would not take any aircraft this year and resume deliveries after market conditions finally improve but unfortunately the group was unable to negotiate such extreme deferrals with manufacturers and leasing companies.
SIA was also unwilling to follow some peers in turning its back on manufacturers and leasing companies or in seeking bankruptcy court intervention, which could have wiped out all its pre-pandemic commitments and enabled SIA to negotiate new orders on much better terms.
While in some respects SIA would have been better off making such a drastic move, honouring all its pre-pandemic commitments is respectable and should result in better supplier relationships well into the future.
ABOUT THE AUTHOR:
Brendan Sobie is the founder of Singapore-based independent aviation consulting and analysis firm Sobie Aviation. He was previously chief analyst for CAPA—Centre for Aviation.
While most businesses would exercise caution and cut or reduce capital expenditure, SIA is taking a big gamble by buying more planes to benefit from the "impending" recovery.
SIA can do this only because they know they have a major shareholder with deep pockets (Temasek) that is obliged to keep supporting SIA.
But Temasek's money is ultimately the citizens' money.
Commentary: Why is SIA taking delivery of 28 new planes this financial year amid Covid-19?
By BRENDAN SOBIE
Published JUNE 03, 2021
TODAY file photo
Singapore Airlines has long had one of the industry’s most aggressive fleet modernisation programmes, rolling over nearly its entire fleet every 15 years.
Most Southeast Asian airline groups have cut aircraft deliveries to a trickle in order to reduce expenditure and capacity amid extremely weak market conditions.
However, Singapore Airlines (SIA) Group is a major exception and plans to take delivery of 28 new aircraft in its current fiscal year which runs from April 1, 2021 to March 31, 2022.
SIA has long had one of the industry’s most aggressive fleet modernisation programmes, rolling over nearly its entire fleet every 15 years.
On average it took delivery of about 22 new aircraft per annum in the five fiscal years prior to the pandemic.
So the 28 new planes it plans to take delivery of in the current fiscal year has raised some eyebrows, given the current environment and how competitors have responded to the pandemic by delaying most new aircraft deliveries.
Why is SIA making such a move and what are the implications for the company?
In a typical year, SIA Group typically takes around 15 per cent of all commercial aircraft delivered in Southeast Asia and is the region’s third largest recipient of new aircraft after AirAsia Group and Lion Group.
However, in the year ending March 2022, SIA will likely account for over half of all commercial aircraft delivered in Southeast Asia.
AirAsia Group, which was initially planning to take over 50 aircraft in 2021, has suspended all deliveries while Lion Group, which had similarly ambitious fleet plans prior to the pandemic, will take only a few new aircraft.
Several other airline groups in Southeast Asia are not planning to take delivery of any new aircraft over the next year.
While deliveries have plummeted globally, there has been a bigger than average decline in Southeast Asia for both 2020 and 2021 due primarily to the massive cutbacks by AirAsia Group and Lion Group.
AirAsia has not taken any aircraft since the start of the pandemic while Lion has taken just two aircraft.
SIA was able to delay some of its deliveries in the previous financial year to the current one, but these were generally less significant in terms of number of aircraft and length of deferrals compared to its competitors.
In February, SIA also announced the completion of renegotiations with Airbus and Boeing, resulting in aircraft deliveries being spread out over more years than initially scheduled.
However, these deferrals are generally less significant compared to those by other airline groups in Southeast Asia.
In a November 2020 commentary for TODAY, I had cautioned how it was more difficult for SIA to renegotiate with aircraft manufacturers, leasing companies and other suppliers than other Southeast Asian airline groups due to SIA’s much stronger financial position.
I pointed out how unlike its competitors, SIA lacked the bargaining power of a distressed company on the verge of collapse.
Suppliers have been relying on SIA to make good on its pre-pandemic commitments, resulting in SIA indirectly subsidising other airline groups in the region that are unable to pay their bills or take delivery of aircraft they had committed to prior to Covid-19.
While some competitors have reduced aircraft capital expenditure to nearly zero, SIA is still spending S$3.7 billion in aircraft capital expenditure for this financial year.
The S$2.8 billion SIA spent on aircraft capital expenditure in the last financial year was also significantly more than many of its regional competitors.
SIA was able to reduce aircraft capital expenditure over the two year period by 38 per cent compared to its original pre-pandemic spending plan but this is a much smaller reduction compared to most competitors.
Aircraft expenditure is a major component of SIA’s massive recapitalisation programme, which has already raised S$15.4 billion since the start of the last financial year, with another S$6.2 billion to be raised from the mandatory convertible bonds the group announced on May 19 it will exercise.
Of the additional S$6.2 billion, S$2.7 billion is set aside for capital expenditure — mainly for aircraft and aircraft-related payments.
Aircraft capital expenditure does not entirely correlate to current year deliveries as a large portion is spent on pre-delivery payments for aircraft that are slated to be delivered in later years.
New aircraft that are being sourced from leasing companies rather than directly from the manufacturers are also excluded from capital expenditure.
Of SIA Group’s 28 slated deliveries in the current fiscal year, 10 are from leasing companies. These are all A321neos for budget airline subsidiary Scoot, the first two of which were delivered in late May.
The other 18 deliveries are sourced directly from the manufacturers. This includes eight 737 MAX 8s and seven 787s from Boeing and three A350-900s from Airbus, all of which are slated to be delivered over the last 10 months of the current fiscal year.
GLOOMIER OUTLOOK
Beyond the current fiscal year, SIA Group has outstanding orders for another 119 aircraft, including 52 from Airbus and 67 from Boeing, that will be delivered over the next several years.
SIA’s fleet currently consists of 176 aircraft but around 50 are not in service — including six 737 MAX 8s that have not operated since March 2019, when the model was grounded globally following two crashes, while the remainder have been grounded for commercial reasons since the start of the pandemic.
SIA may reactivate the 737 MAX, which has already returned to service in other regions, later this year contingent on Singapore and other Asian countries lifting their grounding orders.
SIA plans to gradually bring back its other grounded aircraft, including 12 of its A380s, over the next few years as the market recovers.
In addition to temporarily grounding aircraft, SIA has accelerated the retirement of 45 aircraft since the start of the pandemic, which ensures SIA’s fleet will remain below pre-pandemic levels despite all the new deliveries.
However, the 45 accelerated retirements are not that significant as most were already slated to be phased out over the next few years.
Unlike other more ambitious airline groups, most new aircraft received by SIA have traditionally been used to replace existing aircraft rather than support growth.
SIA’s overall fleet modernisation strategy remains unchanged despite the pandemic, which so far has led to a 98 per cent reduction in passenger traffic.
The group’s steadfast commitment to invest in new aircraft technology, which enables efficiency and product improvements, is certainly noteworthy.
However, to take 28 aircraft in a span of 10 months is not ideal given the bleak short term outlook.
SIA Group passenger traffic was less than 4 per cent of pre-Covid levels in April and will likely remain at about this level through at least the first half of this financial year.
While international travel is starting to resume in other regions, particularly for vaccinated passengers, borders in the Asia Pacific remain closed and aspirations for a partial reopening over the next few months through air travel bubbles or other initiatives have been set back by the new waves of cases that have emerged in several Asian countries.
For the calendar year, SIA Group will likely carry between one and two million passengers in 2021, representing a decline of at least 95 per cent compared to the 38 million carried in 2019.
The outlook has become gloomier since the beginning of this year, when I stated as part of this January 2021 commentary that SIA would likely carry in 2021 slightly fewer than the seven million passengers the group transported in 2020.
SIA ideally would not take any aircraft this year and resume deliveries after market conditions finally improve but unfortunately the group was unable to negotiate such extreme deferrals with manufacturers and leasing companies.
SIA was also unwilling to follow some peers in turning its back on manufacturers and leasing companies or in seeking bankruptcy court intervention, which could have wiped out all its pre-pandemic commitments and enabled SIA to negotiate new orders on much better terms.
While in some respects SIA would have been better off making such a drastic move, honouring all its pre-pandemic commitments is respectable and should result in better supplier relationships well into the future.
ABOUT THE AUTHOR:
Brendan Sobie is the founder of Singapore-based independent aviation consulting and analysis firm Sobie Aviation. He was previously chief analyst for CAPA—Centre for Aviation.
- Joined
- Aug 6, 2008
- Messages
- 14,868
- Points
- 113
What is 4.27 billion?
The dowager has cumulatively lost multiples of that over the years. That is why it is important to teach sons to cut loose women who endlessly want more money.
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