Singapore Airlines (SIA) will unveil a “corporate action” from its biggest shareholder, the country’s state-investment fund Temasek Holdings, Finance Minister Heng Swee Keat announced on Thursday.
The announcement came on the same day the government unveiled its second emergency budget to help the city state’s trade and export-dependent economy amid the coronavirus pandemic.
“I've been informed that SIA is considering a corporate action, supported by Temasek Holdings, and will be making an announcement in due course,” said Heng, also the country’s deputy minister, who revealed in parliament that the fund would come to the help of the national airline.
Temasek, which is owned by the government, controls 55.46 per cent of SIA's shares.
“We will make sure SIA comes out of this in good shape,” Heng said. “Ultimately this is about preserving the status of our air hub so it can emerge stronger from this crisis.”
SIA halted trading of its shares earlier on Thursday pending the announcement, days after grounding most of its aircraft and saying it was seeking refinancing to shore up its weakened balance sheet.
The airline on Monday said travel bans imposed because of the coronavirus pandemic raging across the world and the subsequent collapse in demand for flights posed the “greatest challenge that the SIA Group has faced in its existence”.
The airline, one of Asia’s largest international carriers, said it would cut flight capacity by 96 per cent until the end of April and ground 185 of 196 aircraft.
SIA shares on Monday fell to a 21-year low of S$5.35 (US$3.70) but on Wednesday jumped more than 10 per cent to $6.50. At the start of the year, the company’s shares traded at S$9.11.
Aviation was one of the big winners in Thursday’s stimulus package unveiled to tackle the coronavirus crisis threatening Singapore’s economy.
Heng, the finance minister, unveiled a bazooka worth US$33.7 billion, adding to an earlier US$4.9 billion stimulus package, to shield the city state from the global economic shock of the coronavirus pandemic.
As part of this move, the government said it would pay 75 per cent of all aviation industry employees’ wages, to a maximum of S$4,600 per month – a support package worth S$15.1 billion.
A further S$350 million was set aside to help the airline sector fund measures such as rebates on landing and parking charges, and rental relief for airlines.
Earlier on Thursday, the Ministry of Trade and Industry downgraded its GDP forecast for the year after the economy contracted the most in a decade in the first quarter.
As part of sweeping cost-cutting, SIA has scaled back spending ranging from deferring aircraft deliveries, instituting salary cuts for management and rolling out unpaid leave.
The help for Singapore Airlines dwarfs the limited measures rolled out by Hong Kong for its flag carrier Cathay Pacific and its wider aviation industry, which amounts to only HK$2.6 billion so far in two tranches – an amount the city’s airlines say falls far short of genuine help.
The International Air Transport Association has said airlines will require about US$200 billion to bailout the industry, which is expected to be hit with US$252 billion in lost passenger revenue because of the pandemic.
The United States has also passed a coronavirus-rescue package worth US$58 billion to save the country’s airline industry as part of a wider US$2 trillion bailout of the US economy.
Purchase the China AI Report 2020 brought to you by SCMP Research and enjoy a 20% discount (original price US$400). This 60-page all new intelligence report gives you first-hand insights and analysis into the latest industry developments and intelligence about China AI. Get exclusive access to our webinars for continuous learning, and interact with China AI executives in live Q&A. Offer valid until 31 March 2020.
More from South China Morning Post:
This article Singapore Airlines to get support from state-investment fund Temasek first appeared on South China Morning Post