Not only has the Covid-19 virus outbreak shown no signs of easing, but countries such as Italy, Spain, the UK and US are now seeing huge spikes in infection rates and deaths.
The five major American airlines are now pushing for a massive bailout from the Government to help them survive the Covid-19 crisis. The worrying aspect of this announcement is that it is unclear when SIA can resume services, given that many countries had just begun to shut its borders. Weak balance sheet, negative free cash flowIn SIA’s third-quarter fiscal year 2020 earnings report, the airline carried around S$7.66 billion worth of gross debt. Its balance sheet had only S$1.57 billion in cash.
Though a significant portion of these commitments can likely be deferred, there may still be some cash flow commitment from SIA that is tied up with these contracts.