The flag carrier of Singapore, Singapore Airlines has announced that it has raised approximately $2 billion from a sale and leaseback transaction involving eleven of its aircraft. According to the Chief Executive of Singapore Airlines, this new transaction will reinforce the carrier’s ability to navigate the COVID-19 pandemic and the additional liquidity will put the airline in a strong position.
A total of seven Airbus A350-900s and four Boeing 787-10s were involved in this particular sale and leaseback transaction, with a number of aircraft going to different parties including Aergo Capital Limited, Altavair, EastMerchant and Crianza Aviation, as well as Muzinich and Co. Limited.
Sale and leaseback transactions are very common in the aircraft leasing and financing industry. Typically an asset, in this case, an aircraft is sold to another party and is then subsequently leased back to the airline over a period of time. The seller of the asset in this case the airline becomes the lessee while the purchaser of the aircraft becomes the lessor.
The whole point of a sale and leaseback is it allows a company to receive cash invested in an asset almost instantly, which can be utilized to fund other areas of the business. This type of transaction also allows the business to retain the use of the asset, provided it continues to pay the lease rate to the lessor.
In a statement seen by AeroNewsX, the CEO of Singapore Airlines, Mr Goh Choon Phong said “We will continue to respond nimbly to the evolving marketing conditions, and be ready to capture all possible growth opportunities as we recover from this crisis.”
This is not the first time that Singapore Airlines has had to raise additional capital, since April 2020 the carrier has raised approximately S$15.4 billion in liquidity. In addition to a number of sale and leaseback transactions, Singapore Airlines has been able to raise S$2.1 billion through secured financing, S$2.0 billion from the issuance of convertible bonds and notes, as well as more than S$500 million through short-term unsecured loans.
The flag carrier has certainly explored a range of areas to raise liquidity, during a period of travel restrictions and ongoing uncertainty. However, as numerous vaccines are rollout and distributed across the world, hopefully, this will be Singapore Airlines’ final sale and leaseback transaction.
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Source: https://aeronewsx.com/singapore-airlines-raises-s2-billion-through-sale-and-leaseback/?utm_source=rss&utm_medium=rss&utm_campaign=singapore-airlines-raises-s2-billion-through-sale-and-leaseback
