Singapore Airlines, which is rich in money, wants to gain regional dominance as its opponents are pushed back by Reuters

Made by Jamie Freed

(Reuters) – Singapore Airlines (OTC 🙂 Ltd (SIA) has raised $ 16 billion since the start of the pandemic with the help of a state-owned investor that is in a dominant position among Southeast Asian rivals as its size is reduced and restructured. .

The crisis threatened the survival of hub carriers in non-domestic markets, such as SIA, Hong Kong’s Cathay Pacific Airways (OTC 🙂 Ltd and Dubai Emirates. In particular, Singapore’s Prime Minister Lee Hsien Loong said last year that the government “will make no effort” to get the SIA through the pandemic.

The government-owned major shareholder, Temas Holdings Investment Weapons, signed one of the largest rescue packages for airlines in the world. As a result, SIA has enough funds to continue without a reduction for at least another two years, and is modernizing its fleet to save fuel, reduce maintenance costs, and meet environmental targets while other companies throw aircraft.

“The crisis shows the importance of a money-rich state investor being the main sponsor,” said one banker, who is not allowed to speak to the media and spoke anonymously.

The pile of SIA money is the envy of rivals like Thai Airways and Garuda Indonesia, who have received little government support. Many of SIA’s rivals are cutting fleets, which could eventually weaken their centers and send more link traffic to Singapore.

“Basically, these companies are trying to scare away the debtors,” said Subhas Menon, CEO of Asia Pacific Airlines.

SIA, meanwhile, is improving the fleet and strengthening the Scoot carrier budget. In Europe and North America, leisure travel has brought a revival; if that happens in Asia, carrier budgets will be crucial for airlines.

After emptying old planes last year and reducing staff by 20%, the SIA is under immediate pressure to make it smaller. CEO Goh Choon Phong said the job cuts in May last year were a “very painful process” and said there were no plans for more.

Analysts say it could take 12 to 18 months to recover from extended trips to Asia.

“They can last two to three years without making any money,” said CAPA Aviation Center President Peter Harbison, an emeritus. “But at a certain stage you say ‘is it really worth it? Shouldn’t you take hard steps?'”

Less than 9% of the rights sold in the issuance of SIA’s last $ 6.2 billion convertible bond went to shareholders other than Temas, who state that the state investor has more patience than others to get returns.

Uneven trip for Southeast Asian national carriers https://graphics.reuters.com/SINGAPOREAIR-STRATEGY/azgpoqrqlpd/index.html

MODERN FLEET

SIA delayed $ 4 billion in spending on new flights for three years, including Airbus SE (OTC 🙂 and Boeing (NYSE 🙂 Co. after reaching agreements with manufacturers.

Due to high pre-crisis demand, it is still spending $ 3.7 billion on new aircraft and adding at least 19 aircraft to its fleet this year, including 13 wide bodies, despite low demand.

In contrast, Germany’s largest Lufthansa, which earned nearly four times as much revenue as previous COVIDs each year, has a budget of about 1.521 billion euros ($ 2177 million) by 2021.

SIA’s financial amortization makes it difficult to rescind contracts with manufacturers and renters. Temasek supports the modernization of the fleet.

BUDGET ADVANTAGE

On travel farms and mixed with economic problems from opponents, Scoot is using some of SIA’s money to invest in new software that helps increase staff training and calculate more profitable fares for connecting flights.

“A lot of investment has been made, which is definitely focused on future recovery,” said Scoot Director Campbell Wilson. “I hope these investments will pay off over time.”

Thai Airways lost a large market share to its budget rivals in the previous decade of the pandemic as a result of years of losses, and has yet to formulate a new low-cost strategy as part of a $ 12.9 billion debt-related restructuring.

Garuda, Malaysia Airlines and Philippine Airlines are in similar positions when they have completed or are about to complete major restructuring. They lost money in the years before the pandemic.

“Supposedly, taking away their responsibility will create some unfortunate people who owed them unpaid money,” Wilson said. “To the extent that this is later limited, time will tell.”

($ 1 = $ 1.3427 Singapore dollar)

($ 1 = 32.0300 baht)

($ 1 = € 0.8461)