Singapore Airlines (SIA) welcomes the world's first Boeing 787-10 (in the air) aircraft approaching Singapore Changi Airport after flying from Boeing's manufacturing facility in North Charleston, South Carolina on March 28, 2018.
ROSLAN RAHMAN | AFP | Getty Images
With airlines globally "racing against time" trying to stay afloat as global travel is almost completely wiped out, according to an analyst, Singapore Airlines appears to be better positioned than its peers.
"Everyone … is fighting it," Brendan Sobie, an independent analyst at Sobie Aviation, told CNBC's Squawk Box on Thursday.
In comparison, Singapore Airlines is "in a better position," he said, referring to the airline's liquidity position in Singapore, which he believes was better than "virtually everyone in the global aviation industry."
"This means that they will survive a long downturn, come out of hibernation very quickly in a few years, and may benefit from consolidation," said Sobie.
Singapore Airlines reported a net loss of $ 1.123 billion in Singapore (approximately $ 816.22 million) in the first quarter on Wednesday. The airline said market conditions had "deteriorated rapidly" due to the global spread of Covid-19.
The airline announced last week that through a combination of vehicles such as rights issue and secured funding, it raised approximately $ 11 billion in Singapore or approximately $ 7.994 billion.
When asked whether SIA would have to return to the market soon to get more funds to bridge the period, Sobie said the raised $ 11 billion in Singapore was "temporary" and could take more than a year .
"The other thing to keep in mind is … they have an additional 6 billion (Singapore dollar) that they can borrow from mandatory convertible bonds … which they have already announced as part of their liquidity measures, "he added.
Sobie's view was confirmed by Nomura analysts, who said in a July 29 announcement that Singapore Airlines' recent rights issue had "strengthened" the airline's balance sheet.
"The company's liquidity position appears manageable as it adds secured funding to the rights / mandatory convertible bonds (MCB)," they said. Still, they admitted that "a big question mark" will remain when countries reopen their international flight borders, given the recent surge in Covid 19 cases worldwide.
"Of the 220 aircraft in the group's fleet, 148 are currently parked, 32 are on passenger routes, 7 are freighters and 33 are only used for freight services," said Nomura.
Looking ahead, Sobie said that SIA will "become much smaller" for the next few years and that it will "take a long time" to return to normal size.
"This fiscal year, three quarters ahead, is going to be even worse than expected a few months ago," said Sobie. "They need to be the right size for both this year and next year, which will still decrease significantly."