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Singapore Airlines Secures Record $13 Billion Funding Lifeline
Apr 02, 2020 - 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 a 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.

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