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Singapore Airlines has spent half of the S$8.8 billion raised in rights issue

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Singapore Airlines burned through half of the S$8.8 billion it raised through share sales in just two months, highlighting how carriers' expenses keep incurring even as planes are grounded.

SINGAPORE Airlines (SIA) has used S$4.4 billion, or half, of the S$8.8 billion that it has raised during the rights issue in June, it said in an update.

In a filing to the Singapore Exchange on Wednesday, the flag carrier said it had spent a further S$2.2 billion, of which S$1.1 billion went towards funding operating expenses, settling maturing fuel hedging trades and ticket refunds as border closures prompted scores of flight cancellations. A further S$0.2 billion was used for aircraft purchases and about S$0.9 billion towards debt servicing.

This follows from an earlier announcement in mid June, in which SIA updated it had spent S$2.2 billion of the gross proceeds of the rights issue. Of this, S$2 billion was used to repay a bridge loan facility from DBS Bank, and S$0.2 billion towards covering operating expenses.

In response to a query from BT on its rate of cash burn, an SIA spokesperson clarified that the S$2 billion bridge loan was for expenses incurred before the proceeds from the rights issue arrived. "Once the proceeds came in, we repaid that bridge loan," the spokesperson added.

Aside from the rights issue, SIA also has the option to raise up to S$6.2 billion in additional mandatory convertible bonds (MCBs) by July next year should it need to.

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Last month, the airline group announced it had raised S$750 million in long-term loans secured on some of its Airbus 350-900 and Boeing 787-10 aircraft, taking the total liquidity raised to about S$11 billion. Of the S$11 billion, S$8.8 billion stems from the rights issue, S$1.65 billion from secured financing and over S$500 million from new committed lines of credit and a short-term unsecured loan from financial institutions.

Separately, all existing committed lines of credit that were due to mature this year have been renewed until 2021 or beyond. Combined with the new committed lines of credit, it has access to over S$2.1 billion in committed liquidity, SIA said in a release on July 23.

Airlines around the world are reeling after the pandemic prompted countries around the world to close their borders, upending travel. According to the International Air Transport Association, international air travel may not return to pre-Covid levels until 2024.

SIA, which reported a Q1 net loss of S$1.12 billion, is operating at just 7 per cent of its original capacity this month. To rein in costs, it has taken steps such as cutting salaries and putting staff on some days of no paid leave.

Shares in SIA closed at S$3.63 on Thursday, up one Singapore cent.

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