SIA grounds most of its fleet in response to Covid-19 curbs
Singapore’s national carrier to cut capacity by 96%, says pandemic is ‘greatest challenge’ it has ever faced
SINGAPORE: Singapore Airlines (SIA) will cut capacity by 96%, ground almost all of its fleet and look to raise funds, the carrier said yesterday, in response to coronavirus travel restrictions it called the “greatest challenge” it had ever
faced.
The move comes
as global travel hub Singapore closed borders to travellers and transiting passengers in a bid to stem spread of the virus.
Shares of the airline, majority owned by Singapore state investor Temasek, closed down almost 12% at S$5.36, outstripping losses in the broader market that was down 7% and was its biggest daily decline since October 2008.
The airline
industry worldwide is seeking state bail-outs to absorb the shock from the pandemic, as widespread travel curbs have forced many to ground fleets and order thousands of workers on unpaid leave to keep afloat.
“This will result in the grounding of around 138 SIA and SilkAir aircraft, out of a total fleet of 147, amid the greatest challenge the SIA Group has faced,” Singapore Airlines said.
The company has drawn on its credit lines in the last few days to meet immediate cash flow requirements and is in talks with financial institutions over future funding needs, the national carrier added.
“It’s important to have access to liquidity, to pay leases, to pay employees and to be able to continue to function. This is a positive, but the cost of funding remains uncertain,” said K. Ajith, an analyst at UOB Kay Hian.
In a report issued yesterday before the announcement, UOB Kay Hian had said the carrier needed “backstop liquidity” of at least S$5 billion (RM15 billion) by June.
It faces S$2.5 billion of markedto-market losses by the end of March from having taken out fuel hedges at high prices, the broker said.
Low-cost carrier Scoot will also suspend most of its network, leading to the grounding of 47 of its fleet of 49 aircraft, Singapore Airlines said. – Reuters
Singapore Airlines will ground around 138 SIA and SilkAir aircraft, out of a total fleet of 147. –