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Does SIA need to make another cash call soon?

Jeffrey Tan
Jeffrey Tan9/18/2020 07:00 AM GMT+08  • 9 min read
Does SIA need to make another cash call soon?
As at Aug 14, SIA had already burnt half of the $8.8 billion proceeds raised from rights shares and mandatory convertible bonds.
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In the wake of the recent retrenchment exercise, the big question facing Singapore Airlines (SIA) is whether it needs to raise cash again soon. The national flag carrier has been flying at about 10% of capacity as borders remain mostly shut to halt the spread of the Covid-19 pandemic. Yet the airline still has to pay salaries, and cover expenses, financial obligations and other fixed costs.

As at FY2020 ended March 31, SIA had $5.05 billion in current trade-related liabilities, including $2 billion in advance bookings. It also has $1.6 billion in derivative liabilities. UOB KayHian estimates that SIA would have at least a further $6 billion in payables by the current financial year-end. This is even assuming the derivative liabilities diminish in value.

SIA also had $2.7 billion in short-term debt as at end-FY2020, though UOB KayHian believes this has been fully repaid as at Aug 20. In addition, the brokerage estimates that SIA would be burning $200 million to $300 million per quarter from an operating perspective, inclusive of lease payments for 2QFY2021 and 3QFY2021.

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