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MarketScreener Homepage  >  Equities  >  Singapore Stock Exchange  >  Singapore Airlines Limited    C6L   SG1V61937297

SINGAPORE AIRLINES LIMITED

(C6L)
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Singapore Airlines : obtains $13 billion rescue package amid coronavirus shock

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03/27/2020 | 05:14am EDT
Singapore Airlines planes are pictured on the tarmac at Changi Airport

State investor Temasek Holdings and others put together a funding package of up to S$19 billion ($13.27 billion) for Singapore Airlines (SIA) in the single biggest rescue for an airline slammed by the coronavirus pandemic.

The massive financing plan, which drove SIA shares down as much as 10.5% on Friday, underscores the depth of financial trouble for the global airline industry, with nearly one-third of the world's aircraft already grounded because of the pandemic, according to data provider Cirium.

Many governments worldwide have already stepped in to help airlines amid the virus-induced travel slump, with the United States offering $58 billion in aid. Many carriers have grounded fleets and ordered thousands of workers on unpaid leave to keep afloat.

The S$5.3 billion equity and up to S$9.7 billion (5.5 billion pounds) convertible note portions of the Singapore Airlines fundraising are being underwritten by Temasek, which owns about 55% of the group.

The carrier has also obtained a S$4 billion bridge loan facility with the country's biggest lender, DBS Group Holdings Ltd, to support near-term liquidity needs until the airline secures money from the rights issue.

"This is an exceptional time for the SIA Group," SIA Chairman Peter Seah said in a statement late on Thursday.

SIA's shares went into a rare trading halt earlier Thursday after plunging to their lowest in 22 years this week as investors feared the virus will have a deep impact on the company.

"Under the current dire circumstances, the rights issue is the best tactical move for SIA. It underscores the carrier's strategic importance to Singapore and the island state's position as both a financial centre and aviation hub," Shukor Yusof, head of aviation consultancy Endau Analytics, said in a blog post.

SIA has said it would cut capacity by 96%, ground almost its entire fleet and impose cost cuts affecting about 10,000 staff amid what it called the "greatest challenge" it had ever faced.

The rights issue will be offered at S$3 per share, a 53.8% discount to SIA's last traded price of S$6.5.

"While the raising looks earnings and valuation decretive, SIA now looks well positioned to ride out the storm with balance sheet concerns largely de-risked," BofA analysts told clients.

Temasek International Chief Executive Dilhan Pillay Sandrasegara said the deal would not only tide SIA over a short-term liquidity challenge but would position it for growth beyond the pandemic.

SIA said it would use the funding from the rights issues to beef up its capital and operational expenditure needs.

On Thursday, the Singapore government announced more than $30 billion in new measures to help businesses and households brace against the pandemic.

Finance minister Heng Swee Keat had also said that SIA would announce support from Temasek and that he welcomed Temasek's decision to support the airline.

Qantas Airways this week secured A$1.05 billion (521 million pounds) against its aircraft fleet.

(Reporting by Anshuman Daga; Editing by Dan Grebler and Gerry Doyle)

By Anshuman Daga

Stocks treated in this article : Singapore Airlines Limited, Qantas Airways Limited
Stocks mentioned in the article
ChangeLast1st jan.
QANTAS AIRWAYS LIMITED -4.69% 3.05 End-of-day quote.-7.01%
SINGAPORE AIRLINES LIMITED -2.65% 5.5 End-of-day quote.-2.14%
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Financials (SGD)
Sales 2020 16 092 M
EBIT 2020 500 M
Net income 2020 205 M
Debt 2020 7 698 M
Yield 2020 1,84%
P/E ratio 2020 35,0x
P/E ratio 2021 -18,7x
EV / Sales2020 0,92x
EV / Sales2021 1,21x
Capitalization 7 146 M
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Mean consensus HOLD
Number of Analysts 14
Average target price 6,51  SGD
Last Close Price 6,03  SGD
Spread / Highest target 77,4%
Spread / Average Target 7,97%
Spread / Lowest Target -33,7%
EPS Revisions
Managers
NameTitle
Choon Phong Goh CEO & Non-Independent Executive Director
Lim Huat Seah Independent Non-Executive Chairman
Swee Wah Mak Executive Vice President-Operations
Stephen Barnes Senior Vice President-Finance
Wei Jun Wang Senior Vice President-Information Technology
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