SIA Spent $4.4 Billion Since Mid-June Despite Grounded Planes, Including On Ticket Refunds

SIA Spent $4.4B In 2 Months, It Raised $8.8B Through Share Sales

Covid-19 has severely curbed air travel, causing many airlines to slash their routes, ground planes and cut staff just to stay afloat.

With the decrease in flights and letting go of staff, observers might be tempted to think that airlines’ budgets would be become leaner.

Well, unfortunately airlines are still bleeding money even though their planes are grounded, as our national carrier Singapore Airlines (SIA) has said it has spent $4.4 billion since mid-June.

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$4.4 billion spent from 14 Jun to 14 Aug

The sum was spent in 2 months from 14 June to 14 Aug, Bloomberg quoted SIA as saying on Wednesday (19 Aug).

Of the $4.4 billion, $1.1 billion went to expenditure including operating expenses, showing that it costs a lot to run an airline, even though its capacity is greatly reduced.

A portion of that $1.1 billion was also spent on refunding customers’ plane tickets as their flights were cancelled due to Covid-19.

Another part of that $1.1 billion was burnt on maturing fuel-hedging trades.

$2 billion to repay bridge loan facility

A major part of the outlay was used to repay a bridge loan facility, a total of $2 billion in all.

SIA also issued $900 million to service its debts.

And despite planes being ground, the airline still spent $200 million to buy aircraft.

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SIA raised $8.8 billion through share sales

The $4.4 billion spending represents half of the $8.8 billion SIA raised through share sales, it said.

The carrier raised these funds in June after global travel demand plunged due to Covid-19.

It also attempted to cut costs by putting staff on unpaid leave or lowered salary.

However, SIA still reported a loss of $1.85 billion during the 1st half of 2020.

Amount spent almost as much as combined losses by 3 airlines

To give some perspective, Hong Kong’s Cathay Pacific lost $1.75 billion in the 1st half of 2020.

Australia’s Qantas Airways lost $1.9 billion in the same period.

That means the 3 airlines lost a combined $5.5 billion in 6 months.

SIA’s expenditure of $4.4 billion in just 2 months is just $1.1 billion short of that.

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8% of capacity expected in Oct

In an update on SIA’s website on Wednesday (19 Aug), it said by the end of Oct, it expects its passenger capacity to be just 8% of the levels it saw in Jan, before Covid-19 happened.

From that, we can surmise that SIA isn’t going to make back much of the $4.4 billion it spent, and it’s only going to need to spend more.

And even though Singapore’s Covid-19 situation seems to have stabilised, domestic flights aren’t necessary in a small nation like ours.

If that isn’t a dire state, we don’t know what is.

Hopefully, the situation improves enough so travel restrictions to some other countries can be lifted, and we can travel overseas on SIA again.

Featured image adapted from Facebook.