Singapore Airlines receives huge relief fund
Singapore Airlines have received a major boost by receiving a relief fund of $13 billion or S$19 billion from its major stake holders to keep the airline running at a time when other airlines globally are struggling for liquidity amidst growing concerns of huge losses mounting which would result in collapse of airlines. In recent times Singapore Airlines have grounded almost 96% of its fleet.
Details of relief fund
Singapore Airlines received a relief fund upto S$13 billion which amounts to US$19 billion from state fund Temasek Holdings and that it would underwrite the sale of shares and convertible bonds for up to S$15 billion. Temasek Holdings accounts to having a 55% stake in the airline.
Singapore Airlines biggest lending bank DBS Group Holdings is set to offer a S$4 billion loan. This totally would amount to S$19 billion. Temasek International Chief Executive Dilhan Pillay Sandrasegara said in a statement “This transaction will not only tide Singapore Airlines over a short term financial liquidity challenge, but will position it for growth beyond the pandemic,”
To add more to the current scenario Singapore Government also had banned all transit passengers and short term visitors which Singapore Airlines strength lies in. Singapore Airlines shares reached their lowest in 22 years and their shares went into a trading halt. Singapore Airlines has already grounded 96% if their fleet and is planning to cut costs which would affect around 10,000 employees.
On a global scale Airlines are facing a difficult task to run the show as coronavirus had reduced travel demand which has forced airlines to resort to grounding of their fleet and suspension of services due to governments imposing travel bans and restrictions. To cope with the burden of heavy losses airlines are depending on governments to offer financial packages.
US is offering a $58 billion financial aid to support the airlines. Qantas has received a huge sum as aid against its fleet to cover their expenses and ride out this phase. IATA also has warned around $250 billion losses in 2020 for aviation.
At this point of time, airlines are and will need financial packages to survive this phase hoping it would not last for a long time. If this travel ban and restrictions continue for a period more than expected its hard to see many airlines we’ve seen a month back survive. For the rest of them who do survive it is going to be a long road back to