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Singapore Airlines prepares to transport coronavirus vaccine across the globe

MUMBAI: Singapore Airlines on Tuesday said it has taken several steps to prepare for the distribution of Covid-19 vaccines around the world.

Over the last few months, SIA has been actively engaging various stakeholders across the supply chain and in pharmaceutical export markets to ensure that it is well-positioned to transport the vaccines with speed and reliability.

The airline set up an internal Covid-19 task force in May 2020 to ensure readiness across all aspects of cargo operations, and manage safe carriage of these time- and temperature-sensitive shipments

For the financial year ended March 2020, SIA Cargo carried about 22,000 tonnes of pharmaceutical shipments across its network. Singapore’s Changi airport serves as a hub for transporting the shipments globally and plays a key part in the air transportation of pharmaceuticals, particularly biologic shipments, from Europe and India to South East Asia, Australia and New Zealand.

In order to strengthen its pharmaceutical transport product, SIA has been expanding its THRUCOOL1 cold chain service corridor network, with the latest additions to the network being Brisbane and Melbourne in September this year.

“SIA will make available cargo space on its flights and accord uplift priority to Covid- 19 vaccine shipments across the key vaccine trade lanes,” said the airline in a statement.

This means readying the Boeing 747-400 freighter aircraft, as well as the passenger aircraft fleet which will be deployed on cargo operations to increase the capacity for vaccine transportation where needed.

Thermal protection systems are required to effectively meet the varying temperature requirements of the various vaccines that are currently in the pipeline. SIA has signed master leasing agreements with cold chain container providers such as CSafe, DoKaSch, Envirotainer, Skycell and Va-Q-Tec, to ensure that the airline has access to temperature-controlled containers to handle the large volumes of vaccines that need to be transported by air, it said in a statement.

The airline said it has been working closely with its ground handling partner at Changi Airport, SATS, to ensure that the Singapore air hub is ready to handle and store large volumes of pharmaceutical shipments effectively.

Most Cathay Pacific pilots and cabin crew accept permanent pay cuts

Hong Kong’s Cathay Pacific Airways Ltd said on Thursday that a majority of pilots and flight attendants had signed new contracts that will result in permanent pay cuts. Cathay last week announced plans to cut 5,900 jobs to help it weather the pandemic, including nearly all of the positions at its regional airline Cathay Dragon, which it has shut down. It is also seeking changes to contracts with pilots and cabin crew as part of a restructuring that would cost HK$2.2 billion ($284 million).

“We are very grateful that a majority of our pilots and cabin crew have already signed up to the new conditions of service,” the airline said in a statement. “We would like each and every one of our pilots and cabin crew to join us and be part of Cathay Pacific’s future.”

The employees have until Nov. 4 to sign new contracts but they will receive one year of transitional benefits like housing allowances for pilots rather than the two years offered for those that signed up by Wednesday evening. The airline has told them if they do not agree to the new contracts by next week, they face termination, according to unions representing pilots and flight attendants.

The pilot contracts, which are broadly in line with those given to new hires since 2018, will result in permanent salary reductions of up to 58%, the Hong Kong Aircrew Officers Association (HKAOA) said on Tuesday. HKAOA General Secretary Chris Beebe last week told Reuters the decision to force pilots on to lower-paid contracts was “draconian” and “short-sighted”.

Staff at many airlines around the world including rival Singapore Airlines Ltd have agreed to temporary pay cuts to help their companies get through the COVID-19 crisis, but the Cathay reduction is permanent. Cathay Chairman Patrick Healy told reporters last week that the terms of the new contracts were “highly competitive” with those of global peers.

Airlines are making money selling everything but tickets

By David Fickling

With hopes that their season in hell could be approaching an end, airline stocks are on a tear.

Shares in Singapore Airlines Ltd. jumped the most in 21 years Tuesday while those in Cathay Pacific Airways Ltd. were up the most since 2008 after Singapore and Hong Kong announced the opening of a travel bubble starting Nov. 22. News of successful trials of a Pfizer Inc. and BioNTech SE coronavirus vaccine pushed the Bloomberg World Airlines Index up 9.7% Monday in anticipation of an ebbing tide of pandemic.

Bloomberg

The cavalry better come quickly. Right now, much of the industry is running short of rations.

With traffic down 73% from a year earlier in September — and international flights running at just 12% of their levels a year ago — the usual path for companies to bring in cash by eking out a margin on their revenue is still blocked. That could remain the case well into next year, given the likely bottlenecks to producing and distributing vaccines in quantities sufficient to reopen international travel.

Still, there’s more than one way to provision your army. If you can’t sell plane tickets, you can still try everything else that’s not nailed down.

Bloomberg

The first thing companies try to sell in a crisis are bits of paper. Airlines have issued $88 billion in bonds so far in 2020, more than half of the $153 billion that the industry sold over the previous four decades put together, according to data compiled by Bloomberg. Throw in the value of loans taken out and airlines’ total debt is up by $124 billion since the end of February, the data show.

It’s a similar picture on the equity side.

Japan Airlines Co. last week announced plans to raise as much as $1.6 billion by issuing shares equivalent to about a third of the existing register. Singapore Airlines’ $6.5 billion rights issue in June represents the biggest raising of additional equity by any airline in history. The $27 billion in new shares issued by the industry as a whole this year is equivalent to all the cash raised through that route over the previous six years put together.

Bloomberg

In aggregate, all the new debt and equity sold by the world’s carriers this year amounts to nearly two-thirds of the $241 billion that the International Air Transport Association expects the industry to collect in passenger revenue through the whole year.

Companies that own fleets of high-value transport equipment have other ways to get cash, too. EasyJet Plc raised $170 million this month from the sale and leaseback of 11 of its planes to aircraft leasing companies. Air Canada last month took in $365 million from a similar move and Wizz Air Holdings Plc and United Airlines Holding Inc. have done the same.

The fundraising effort has been titanic. Compare the revenue of some of the world’s largest airlines in the most recent quarter with their cashflows from finance and investing, minus the capital expenditure that airlines usually have to commit well in advance, and you can see the picture clearly:

Bloomberg

Typically airlines should see cash outflows from finance and investing offset with an inflow from operating activities. That’s what you have with Chinese carriers, which have returned to some semblance of normality in recent months with the suppression of Covid-19. Elsewhere in the world, however, working the balance sheet has often been bringing in more money than selling transport services.

You might regard that flexibility as a hopeful sign — but as we’ve argued, a miserable third quarter is likely to lead to a grim winter for airlines. Chances are there’s far more to come in terms of bankruptcies and restructuring. Getting the industry out from under its Covid-induced debt load could take the best part of a decade.

Furthermore, while demand for tickets from air passengers is more or less an inexhaustible resource, there are only so many assets that a carrier can sell and lease back before it runs out. The orgy of bond and stock issuance this year is also likely to be leading to sharply diminishing appetites among creditors and shareholders.

In spite of the slump in share prices, investors still show a surprising amount of enthusiasm for airlines. If only passengers felt the same way.

Singapore Airlines posts $106 million Q3 loss as passenger numbers plunge 98 percent

Singapore Airlines Ltd on Thursday posted a S$142 million ($106.36 million) net loss in the third quarter as passenger numbers plunged by 97.6% due to the pandemic, though its cargo business held up better given a tight freight market.

The loss compared with the prior year’s S$315 million profit in the quarter ended Dec. 31. Revenue fell 76.1% to S$1.07 billion.

The bottom line loss was slimmer than its S$331 million operating loss due to a tax credit. Broker UOB Kay Hian had expected it to report a core loss of around S$470 million for the quarter, excluding any impairment charges, while UBS had forecast a net loss of S$330 million.

Singapore Airlines operated around 19% of its pre-pandemic passenger capacity in December and said it expected to reach around 25% of normal levels by the end of April as it adds flights to its schedule despite the spread of more transmissible variants of the coronavirus.

“In line with Singapore’s progressive re-opening, the group expects to see a measured expansion of the passenger network over the coming months,” the airline said in a statement. “We will continue to monitor the status of travel restrictions and adjust our capacity accordingly to meet the traffic demand.”

The carrier will begin operating Boeing Co 737-800 planes at its main brand from March as part of a plan to merge its regional offshoot SilkAir into the parent, with full integration expected by March 2022.

Singapore Airlines has raised S$13.3 billion since the start of the pandemic and said discussions on aircraft sale and leaseback deals were at an advanced stage.

The airline’s staff have begun to be vaccinated against COVID-19 as part of the government’s goal of making it the first carrier to have fully vaccinated employees.

The airline last year cut 4,300 jobs, or around 20% of its staff, due to the pandemic-related collapse in travel demand.