Singapore Airlines announced on 26 March it will be offering all of its shareholders S$5.3 billion in new equity and up to a further S$9.7 billion through a 10-year mandatory convertible bond.

Both will be offered on a pro-rata basis via a rights issue and treated as equity in the company’s balance sheet.

Supporting the company’s near-term liquidity requirements, the airline has also arranged a S$4 billion bridge loan facility with DBS Bank.

The rights issuances are still subject to shareholder approval at an extraordinary general meeting that will be held in due course.

Capital and operational expenditure

The airline says it plans to use the proceeds from the rights issues to fund capital and operational expenditure requirements, and that the airline’s largest shareholder Temasek Holdings will vote in favour of the resolutions and procure a subscription for its full entitlement and the remaining balance of both issuances.

SIA chairman Peter Seah said: “This is an exceptional time for the SIA Group. Since the onset of the Covid-19 outbreak, passenger demand has fallen precipitously amid an unprecedented closure of borders worldwide. We moved quickly to cut capacity and implement cost-cutting measures.”

“The strong commitment and support from our staff and our unions as we work together on measures to tackle this crisis have been remarkable. I am heartened that our people are doing everything they can, in these most difficult of times, to support our customers and sustain our operations.”

“We have also worked closely with the Singapore government to bring Singaporeans home safely during this time. At the same time, we are also working with various parties to enable our staff on no-pay leave to have other income opportunities.”

Grounding of fleet

Singapore Airlines announced on 23 March it will be cutting 96 per cent of its capacity that was scheduled up to the end of April, resulting in the grounding of around 138 Singapore Airlines and SilkAir aircraft out of a total fleet of 147.The group’s low-cost unit Scoot is also suspending most of its network.