star

Airline SAS said it hopes to convert debt to equity and raise 9.5b Swedish crowns ($972m) in new cash, warning of liquidity problems if it falls short as it posted a quarterly loss that was narrower than a year ago. The carrier, part-owned by Sweden and Denmark, has been struggling for years and in February unveiled a major new restructuring plan that it said depended on raising then-unspecified new capital. "In addition to reducing the cost structure and improving efficiencies, SAS is seeking to convert approximately SE 20b of debt and hybrid notes into common equity and will also seek to raise not less than SE 9.5b in new equity capital," SAS said Tuesday. However, CEO Anko van der Werff told analysts on a call there had not been sufficient progress so far with the restructuring plans, and both governments declined to say whether they would pay up again after agreeing a 3b-crown rescue deal with the company in 2020. SAS said discussions with stakeholders overall had made "limited progress," and its shares were down 7% at 1015 GMT. "In the event that the expected burden sharing, debt conversions, and new capital raise are not completed as planned, SAS will not be able to support its existing capital structure and current liquidity levels," it said. SAS reported a February-April loss before tax of 1.56b crowns against a year-earlier 2.33b loss. The carrier was already struggling before the coronavirus pandemic amid high costs and increased competition. The aviation industry is now struggling to recover from COVID and SAS has reduced its summer programme by 4,000 of 75,000 planned flights.<br/>

Singapore Airlines is committing to a strategy of working with international partners and establishing overseas hubs after the pandemic exposed the financial dangers of not having a domestic air travel market. The airline is open to opportunities and will evaluate potential synergies, CEO Goh Choon Phong said Tuesday. Goh, a 58-year-old industry veteran who joined Singapore Airlines in 1990 and became CEO in 2011, is trying to guide one of Asia’s most pre-eminent carriers out of the toughest period in its history. This time last year, the airline had just announced a record annual loss and was flying only a few thousand people a month compared with as many as 2 million passengers in pre-Covid times. Unsure when the situation might improve, Singapore Airlines had to raise billions of dollars to get through the crisis. Now that Singapore and most other countries around the world have opened their borders again to quarantine-free travel, the carrier was able to increase traffic to more than 1m passengers in April, the most since the pandemic began. Goh highlighted India as a key growth area, saying it is expected to become the world’s third-biggest aviation market by the middle of this decade, if not before. Singapore Airlines teamed up with Indian conglomerate Tata Sons Pvt. to form full-service carrier Vistara, which started flying in 2014. Vistara now serves nine overseas destinations and 31 in India, though it has yet to make a profit. “India is obviously a very important one because it’s going to be massive,” Goh said. “We want to continue to look at scaling up Vistara and ensuring that it grows well.” <br/>

Boeing has reached out to Singapore Airlines to discuss potential compensation for failing to deliver its long-delayed 777X aircraft on time, according to the CEO of the city-state’s flag carrier. “When the delay was foreseen you can imagine that Boeing would have reached out to us for early compensations,” Goh Choon Phong said Tuesday. “Obviously, we expect Boeing to help us in the interim to make sure that we continue to be able to deploy the right capacity.” Boeing in April delayed deliveries of 777X jets to 2025, five years later than expected, prompting some plane lessors to suggest the product’s future is in doubt. The US planemaker -- which offers the model in two variants -- won’t resume production until 2023, leading to speculation some buyers may cancel orders or switch to Airbus SE’s A350 jets. Singapore Airlines had 31 of the 777Xs, Boeing’s largest aircraft, on order. “We are a very important customer to Boeing. I’m sure Boeing will tell you that too,” Goh said, adding that any conversations between the two are confidential. “There are conversations on what is the impact of the delay.”<br/>

Air China is in talks to acquire a controlling stake in Shandong Airlines’ parent company. In a stock exchange filing on 30 May, the Beijing-based carrier says it “is planning to acquire the control” of Shandong Aviation Group, which will allow it to gain control of Shandong Airlines. Air China holds a 49.4% shareholding in Shandong Aviation, as well as a 22.8% stake in Shandong Airlines. The carrier says: “The transaction is currently at negotiation stage and no due diligence, audit, valuation and other related works have been completed. The company and the counterparties have not yet signed any transaction agreement in relation to the transaction and the specific proposal of the transaction is still under planning.” No reason was given for the proposed acquisition, though Air China says it does not intend to issue shares to purchase assets, nor will the transaction “constitute a change” in its own shareholding. “There is significant uncertainty as to whether the parties to the transaction will ultimately reach an agreement on the transaction and sign the relevant agreement,” the carrier states. Apart from Air China, Shandong Airlines is 42% owned by Shandong Aviation, with the remaining 35.2% publicly traded. Shandong Airlines counts Air China as a key codeshare partner, with the airline adding its code on over 600 routes, Cirium data shows. The Jinan-based carrier has a fleet of 124 in-service aircraft, comprising 121 Boeing 737-800s and three -700s. <br/>