Singapore Airlines (SIA) posted a record first-half net loss of SGD3.5 billion (USD2.6 billion) at the close of the market due to the effects of travel curbs caused by the COVID-19 pandemic. Due to tighter border controls, travel restrictions, and the reluctance of travelers to fly in the midst of the global pandemic, SIA, whose financial year begins in April, saw passenger traffic measured in passenger-kilometer revenue decrease by 98.9 percent in H1. With no domestic path, its company is more vulnerable than its regional peers to the coronavirus effect.
Unlike other regional airlines in Southeast Asia, however, SIA has managed to increase its liquidity significantly. In June, it raised SGD8.8 billion (USD6.5 billion) via a shareholder rights issue, while SIA said it had used about 70% or SGD6.2 billion of the funds it had raised in an October 19 disclosure to the Singapore Exchange. In addition to the one-time SGD2 billion repayment of DBS Bank's bridging loan, the sums were drawn down were primarily used for debt servicing (SGD1.6 billion), SGD1.3 billion for operating expenses, and SGD1.1 billion for ticket repayments.
SIA added that it has access to approximately SGD1.9 billion in lines of credit and can collect an additional SGD6.2 billion from the issuance of compulsory convertible bonds if the crisis continues. To date, SGD $2.1 billion has also been earned from short-term unsecured loans and loans secured against its aircraft.
Though SIA appears to be well-funded well into 2021, some of the airlines in Southeast Asia can not say the same. In October, Reuters announced that Malaysia Airlines was struggling to meet payments owed to creditors and leasing firms. A scheme involving major creditor discounts has been suggested by the national airline, which restructured after two deadly crashes in 2014, but unlike last time, the government is reluctant to bail it out. Reuters also announced that Khazanah, Malaysia's state investment company, has warned leasing companies that if restructuring talks with lessors are unsuccessful, it would stop funding the airline group and push it into a winding-down phase.
Created by flamboyant businessman Tony Fernandes, AirAsia, also based in Malaysia, is also in a liquidity crunch. To remain afloat, it is also searching for financial assistance. Last month, when Nikkei Asia announced that it had received an MYR1 billion (USD 242 billion) loan from the government, it appeared to have gained a reprieve only for the Malaysian Ministry of Finance to deny that such an arrangement was made days later.
"AirAsia X Bhd has, a long-haul subsidiary, is reportedly" running out of money and needs to collect up to MYR 500 million (USD 120 million) to restart the airline, "Malaysian media quoted Deputy Chairman Lim Kian Onn as saying. AirAsia's parent company has a 13.6 percent interest in the company, with the main shareholder being Fernandes.