SIA trims Q4 loss, full-year loss at record S$4.3b; carrier to issue S$6.2b mandatory convertible bonds

MAINBOARD-LISTED flag carrier Singapore Airlines (SIA)'s net loss narrowed to S$662 million for the fourth quarter to March, from S$732 million in the corresponding period a year ago.

But, it will tap the additional mandatory convertible bonds to raise a further S$6.2 billion, given international air travel remains severely constrained and recovery trajectory is still unclear.

The carrier was awash in red ink for the financial year 2021, chalking up a record net loss of S$4.3 billion in its "toughest year in its history", said SIA in a financial results filing on Wednesday.

The losses mark a full year of the brunt from the coronavirus pandemic that hit international travel in early 2020, grounding most of SIA's fleet and causing it to burn through cash to the tune of hundreds of millions of dollars a month.

Net loss for FY2020 was S$212 million, it having been profitable for three quarters of that year before the novel coronavirus started to wreak havoc.

The carrier recorded S$110 million in a net gain for the fourth quarter in relation to fuel hedging and fuel derivatives, as Brent crude prices rebounded from the trough of under US$20 a barrel in April 2020 and spiked to about US$70 in March.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

This came as it reported fuel hedging losses of S$89 million and fair value gains of S$198 million on fuel derivatives that had earlier been deemed to be ineffective hedges.

Fourth-quarter revenue was 65 per cent lower year on year at S$1.1 billion as passenger traffic continued to be curtailed by international border closures to stem the virus spread.

Operating loss at S$319 million for the quarter was an improvement from S$803 million clocked a year ago.

No final dividend was declared, the same as FY2020.

Going by its current published schedules, the group expects the passenger capacity to be around 28 per cent of pre-Covid levels by June 2021 and 32 per cent a month later.

Also, it noted that the prognosis for the global airline industry remains uncertain, even though mass vaccination exercises are in progress in most of its major markets. Thus, it is "crucial for the group to have sufficient liquidity to weather the current challenges".

Accordingly, it will undertake a further issuance of S$6.2 billion worth of mandatory convertible bonds.

The counter closed 3.29 per cent lower at S$4.70, leading the decline on the Straits Times Index on Wednesday, before the financial results were released.

Read more:

• SIA may need funds again with slow recovery but it has several options besides tapping MCBs