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The reluctant borrower
01 November 2005
Singapore Airlines is one of the world's most profitable carriers but the delivery of its new A380 and 777 aircraft may force it to break with tradition and tap the bank and capital markets for funding. Dominic Jones reports.
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airline; Singapore Airlines; Citigroup; operating lease
JOL
Airways
It is one of the most bankable names in aviation, but Singapore Airlines is also one of the least likely to seek external financing. Financiers are hoping for a change. The Asian airline will need to make a heavy capital expenditure commitment over the next three years, and a changing market environment may encourage it to seek an increased volume of funding from banks or debt capital markets.
Few other carriers are able to emulate Singapore Airlines' ability to deliver consistently strong profitability. Despite rising fuel costs and increasing low-cost competition, it achieved a record operating profit of S$1.356 billion ($830 million) in the 12 months to March 2005. Even during the 2003/04 financial year, when passenger traffic was hit by the severe acute respiratory syndrome (Sars) outbreak, Singapore Airlines reported a net profit of S$849 million.
Over the past decade, this industry-beating operational performance has...
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