Left Menu
Development News Edition

Singapore Airlines latest to get massive rescue amid coronavirus crisis

Reuters | Singapore | Updated: 27-03-2020 10:17 IST | Created: 27-03-2020 09:26 IST
Singapore Airlines latest to get massive rescue amid coronavirus crisis
Representative Image Image Credit: Wikimedia Commons

Singapore Airlines Ltd said it had secured up to S$19 billion ($13 billion) of funding to help see it through the coronavirus crisis and expand afterward, in a sign of confidence travel demand will eventually return. It is the single biggest financing package announced by an airline since demand plunged because of the pandemic, forcing carriers around the world to ground planes, put staff on unpaid leave and scramble to raise more cash to ensure their survival.

American Airlines Group Inc, a much larger carrier, on Thursday evening disclosed it would be eligible for $12 billion of U.S. government aid as part of a $58 billion loan and grant package for the airline industry. Singapore Airlines' majority shareholder, state-fund Temasek Holdings, said it would underwrite the sale of shares and convertible bonds for up to S$15 billion. Singapore's biggest bank DBS Group Holdings Ltd provided an S$4 billion loan.

"This transaction will not only tide SIA (Singapore Airlines) over a short term financial liquidity challenge but will position it for growth beyond the pandemic," Temasek International Chief Executive Dilhan Pillay Sandrasegara said. "The delivery of a new generation aircraft over the next few years will provide better fuel efficiencies as well as meet its capacity expansion strategy." For the time being, the airline, a major customer for Airbus SE and Boeing Co, has cut capacity by 96% and grounded almost its entire fleet after the Singapore government banned foreign transit passengers, the lifeblood of the hub carrier.

Some other financially strong carriers are also banking on a return to more normal times once the pandemic has passed, such as Australia's Qantas Airways Ltd, which is continuing with costly plans to refurbish the interiors of its fleet of 12 grounded A380 superjumbos. Others, including Air New Zealand Ltd and Virgin Australia Holdings Ltd, have warned they expect to be smaller carriers in the future.

South Korean low-cost carrier Eastar has begun returning some of its Boeing 737 planes to lessors, while Southwest Airlines Co said it would consider actions to reduce the company's size if passenger traffic remains significantly lower six months from now. Nearly one-third of the world's aircraft fleet is now in storage, data provider Cirium said.

BATTLE FOR SURVIVAL

Brendan Sobie, an independent aviation analyst, said normal commercial financing arrangements such as credit lines or the sale and leaseback of planes were unlikely to be enough to help most airlines survive the crisis and thrive afterward.

"When these airlines raise cash privately, they won't get the kind of terms Singapore Airlines got from Temasek," he told Reuters. "They may be able to get the cash to pay bills such as monthly leasing bills at a time of virtually no revenue but later on, the cost of the capital is very high - and that in turn limit what they can do," Sobie said. "That, in turn, slows the potential recovery of air transport in some markets."

Airport traffic at 12 major hubs in Asia-Pacific region plunged by 80% on average in the second week of March compared with the same period last year, Airports Council International Asia-Pacific said on Friday as it called for government relief measures for airport operators. U.S. airlines are preparing to tap the government for up to $25 billion in grants to cover payroll, even after the government warned it may take stakes in exchange for bailout funds, people familiar with the matter said.

After the U.S. House of Representatives approves the airline bailout and President Donald Trump signs it as early as Friday, airlines are to receive initial payments within 10 days. European lawmakers overwhelmingly agreed on Thursday to suspend until Oct. 24 a rule requiring airlines to use at least 80% of their flight slots to keep them the following year.

China, which had been showing some early signs of a recovery in flight capacity, on Thursday ordered airlines to sharply cut the number of flights in and out of the country out of concern that infected travelers from overseas could reignite the coronavirus outbreak that paralyzed the country for two months. The Civil Aviation Administration of China (CAAC) said it had directed Chinese airlines to maintain only one route to any country and limit the number of flights to one per week, effective March 29.

CAAC also ordered foreign airlines to reduce their international routes to China to one per week and only operate one route into the country. ($1 = 1.4305 Singapore dollars)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Download The Devdiscourse News App for Latest News.


TRENDING

OPINION / BLOG / INTERVIEW

Maritime transport post-COVID 19: Disruptions ahead in business models, techno-investments, regulations

Cargo shipping is a crucial part of the global supply chains and is likely to become more resilient along with efforts to make supply chains resilient but cruise liners could face much more disruptive changes....

Asia-Pacific response to COVID-19 and climate emergency must build a resilient and sustainable future

... ...

Videos

Latest News

Coronavirus crisis warranted 'forceful' response from Fed, minutes show

Faced with an accelerating health crisis centered around the coronavirus outbreak, U.S. Federal Reserve officials last month agreed they needed a pull-out-all-the-stops effort to blunt an economic meltdown as they struggled to comprehend th...

Soccer-Premier League footballers launch fund for NHS charities

Premier League footballers, facing pressure to accept wage cuts during the coronavirus outbreak, have launched a fund to raise money for National Health Service NHS charities to help tackle the coronavirus outbreak. With the Premier League ...

Medtronic wins U.S. approval for ventilator, plans launch in May

Medical device maker Medtronic Plc said on Wednesday it has won the U.S. Food and Drug Administrations approval to immediately market its ventilator, which it plans to launch by May, to meet increased demand due to the coronavirus outbreak....

Starbucks sees sales impact from coronavirus stretching into end of 2020

Starbucks Corp said on Wednesday the financial hit from the coronavirus pandemic would extend into the final quarter of 2020, but added that it had no plans to cut its quarterly dividend.Starbucks also said it would temporarily suspend its ...

Give Feedback