Singapore Airlines and Cathay Pacific get billions

June 10, 2020
Singapore Airlines
Photo: Singapore Airlines.

Singapore Airlines and Cathay Pacific Airways have both secured multi-billion dollar lifelines to fly through the impacts of COVID-19.

SIA has raised S$10 billion of liquidity through its recent Rights Issue, as well as a mix of secured and unsecured credit facilities. This puts SIA on a steady footing as it tackles the challenges posed by the global Covid-19 outbreak.

SIA secured S$8.8 billion in liquidity through the successful completion of the rights issue on 5 June 2020. A further S$900 million was raised through long term loans secured on some of SIA’s Airbus A350-900 and Boeing 787-10 aircraft.

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In addition, the Company has also arranged new committed lines of credit and a short-term unsecured loan with several banks, which provide further fresh liquidity amounting to more than S$500 million.

Separately, the airline has rolled over all existing committed lines of credit that were due to mature during the course of 2020 to 2021 or later, thus ensuring continued access to more than S$1.7 billion in liquidity.

For the period up to July 2021 as a backstop, the airline also retains the option to raise up to a further S$6.2 billion in additional mandatory convertible bonds, which will provide additional liquidity if necessary.

Singapore Airlines Chief Executive Goh Choon Phong said. “We are grateful for the strong support of our shareholders for our successful rights issue, which has secured the company’s future amid unprecedented global health and economic crisis. We are also grateful to our relationship banks for their support in extending additional secured and unsecured loans, as well as committed lines of credit.”

Just to the north, Hong Kong will lead a US$5 billion rescue of Cathay Pacific Airways with a recapitalization.

Under the plan, the Hong Kong government will be issued HK$19.5 billion of dividend-paying preference shares and HK$1.95 billion of warrants, giving it a 6 percent stake.

As well, it will provide a HK$7.8 billion bridging loan.

The Hong Kong government will get two non-voting observers at board meetings.

“The alternative would have been a collapse of the company. Commercial debt markets are effectively closed to airlines today who do not have extensive government shareholder support,” Mr. Healy said.