SQ solvency

Old Mar 22, 20, 8:45 am
  #1  
Original Poster
 
Join Date: Oct 2002
Location: SFO
Posts: 5,174
SQ solvency

I, like many others, am holding non-refundable tickets for travel soon that will likely be converted to open tickets due to the transit ban just enacted. These open tickets are essentially a voucher for future travel.

I assume SQ becoming insolvent is a real possibility.
I admit to knowing nothing about how SQ is owned so I have no idea what sort of financial backing they have.

How concerned should I and others be about SQ making it through this?

Given the much bigger issues this pandemic is presenting, I hope this post doesn't come across as selfish. If we all get through these horrible times and I'm left with a worthless travel voucher, so be it.
Jaunt411, Brendan and tbm13 like this.
work2fly is offline  
Old Mar 22, 20, 8:52 am
  #2  
 
Join Date: May 2003
Location: Singapore
Programs: QF LTG, SQ EGTP, MH Silver, SPG Gold
Posts: 4,203
If SQ is allowed to fail, then it will be a sign of the end of Singapore Inc. Put simply, they are quite integral to the Singapore economy that one just canít see the government letting them fall over
RTWFF, 1readyset2go, kt85 and 4 others like this.
lokijuh is offline  
Old Mar 22, 20, 9:03 am
  #3  
 
Join Date: Dec 2001
Location: BRU, SIN, PEK
Programs: SQ TPP, LH SEN
Posts: 3,208
yeah. not gonna happen. Singapore Airlines will get all the govt backing needed to recover from this. If anything while a publicly traded company it's probably considered an essential govt 'asset' for security reasons too.
tbm13, DiamondMile, RTWFF and 5 others like this.
fimo is offline  
Old Mar 22, 20, 9:35 am
  #4  
 
Join Date: Feb 2009
Posts: 58
Temasek Holdings controls quite a substantial share in Singapore Airlines I think.

Between Changi Airport and Singapore Airlines, the government will prioritize Changi as seen from the liberal air policy.

But SQ is a national carrier and national pride, the Singapore government won't allow it to fail. If they have to bail out only one carrier, between SQ and Jetstar, they will bail out SQ. In times of crisis, they still need Singapore Airlines, see the thread on the government arranging for Singapore Airlines to bring Singapore students in the UK home.
Zilchster is offline  
Old Mar 22, 20, 9:48 am
  #5  
 
Join Date: Jun 2017
Posts: 774
Originally Posted by Zilchster View Post
Temasek Holdings controls quite a substantial share in Singapore Airlines I think.

Between Changi Airport and Singapore Airlines, the government will prioritize Changi as seen from the liberal air policy.

But SQ is a national carrier and national pride, the Singapore government won't allow it to fail. If they have to bail out only one carrier, between SQ and Jetstar, they will bail out SQ. In times of crisis, they still need Singapore Airlines, see the thread on the government arranging for Singapore Airlines to bring Singapore students in the UK home.
temasek holding hold 55% of SIA.
Basically SIA is still hold by SIN gov.
sbs2716g is offline  
Old Mar 22, 20, 11:33 am
  #6  
 
Join Date: Aug 2017
Posts: 25
Do not forget that the Finance Minister of Singapore holds the one special share in SQ.
tth_ben is offline  
Old Mar 22, 20, 7:06 pm
  #7  
 
Join Date: Sep 2018
Programs: Alaska
Posts: 785
Most todayís operating carriers will continue after crisis. It is not likely that suddenly the world does not require air travel any more.

shareholders may be destroyed, not the company.
freed0m is offline  
Old Mar 22, 20, 8:49 pm
  #8  
 
Join Date: Mar 2015
Programs: HH Diamond, IHG Plat, GHA Black
Posts: 1,823
Originally Posted by work2fly View Post
How concerned should I and others be about SQ making it through this?
https://www.singaporeair.com/saar5/p...report1819.pdf

I am not in finance / finance-related line so I don't know how to read financial statements properly and this 'analysis' is therefore little more than guesswork.

But it seems to me that (i) Expenses are around 1.3b a month, and (ii) General Reserves are around 11.2b. Expenses will undoubtedly come down a bit by capacity cuts and pay reductions for staff, so even without government help it does seem that SQ won't be in too much trouble unless COVID lingers into Q4 or into next year.
shuigao is offline  
Old Mar 23, 20, 12:47 am
  #9  
 
Join Date: Jan 2020
Location: CGK
Programs: SQ KF, Marriott Bonvoy, GA Miles, QR Privilege
Posts: 31
Can anyone here telling me what is the common ratio of fix cost vs variable cost in an airline?
That might be applicable as well with SQ.

I read somewhere that some of the crew are sent home unpaid, meaning they can manage the variable cost in some way.
Not sure about fix cost dilution though.

Thanks....
aritrixa is offline  
Old Mar 23, 20, 6:23 am
  #10  
 
Join Date: Jun 2017
Posts: 774
This is their latest financial statement
so staff cost/fuel is around 50% of their expenditure. Depreciation is around 13%. So these 3 are around 63%

depreciation canít be avoided. Staff cost - might be able to reduce a bit only? Fuel cost -should have some losses due to the hedge.
the rest should be able to reduce.


sbs2716g is offline  
Old Mar 23, 20, 8:13 am
  #11  
 
Join Date: Jan 2020
Location: CGK
Programs: SQ KF, Marriott Bonvoy, GA Miles, QR Privilege
Posts: 31
Thank you for the P/L statement, sbs2716g

Never thought there is still big chunk of fix cost.
Temasek will be able to help easily with fresh cash if needed, in my opinion.
aritrixa is offline  
Old Mar 23, 20, 8:36 am
  #12  
 
Join Date: Jan 2020
Programs: Krisflyer
Posts: 17
Highly unlikely that the government of Singapore that is rich in reserves would let the National carrier go bust .
Lightraveller is offline  
Old Mar 23, 20, 6:20 pm
  #13  
 
Join Date: Feb 2014
Programs: EK Silver, *A Silver
Posts: 61
OP, you have every right to be concerned, however I find it hard to believe that SQ would 'fail'.

I have travel booked in December / January which I could cancel, but won't (if that provides any reassurance to you!!).
Mitglied is offline  
Old Mar 24, 20, 12:57 am
  #14  
 
Join Date: Dec 2011
Location: NYC
Posts: 1,261
SQ majority shareholder is the Singapore Government.

Singapore government holds US$280b forex reserves, besides for various global assets.

Singapore government annual budget is ~US$60B.

SQ isn't going bust.
HumbleBee is offline  
Old Mar 25, 20, 11:32 pm
  #15  
 
Join Date: Jun 2007
Programs: ROP Gold
Posts: 1,270
SIA is a strategic asset for Singapore (in terms of tourism and national security) and has usually been profitable in the past. So the SG government will not allow it to go bust.

The most Temasek will privatise SIA, like they did for SMRT.
anaidross is offline  

Thread Tools
Search this Thread
Search Engine: