May 15, 2020 / 2:05 AM / 15 days ago

Singapore Airlines cuts capital spending estimate by 12% amid virus crisis

FILE PHOTO: A Singapore Airlines plane sits on the tarmac at Singapore's Changi Airport March 11, 2020. REUTERS/Edgar Su/File Photo

SYDNEY (Reuters) - Singapore Airlines Ltd said on Friday it would slash capital spending by 12% to S$5.3 billion ($3.72 billion) from a previously planned S$6 billion in the financial year ending March 31 as it grapples with the coronavirus crisis.

The airline’s update from its last estimate in November was provided in slides released ahead of an analyst and media briefing to discuss its full-year results.

Singapore Airlines on Thursday evening reported its first-ever annual loss, citing poor fuel hedging bets and the collapse in demand driven by the coronavirus pandemic, saying the timing of any recovery was uncertain.

Its shares were up 0.8% in early trading on Friday.

The latest capital spending budget reduces the amount spent on new aircraft by S$600 million and on other items by S$100 million. The airline said it was negotiating with aircraft manufacturers to adjust the delivery stream for orders placed in the past because of the current market conditions.

Singapore Airlines and regional arm SilkAir have cut 96% of passenger capacity through the end of June, and low-cost arm Scoot has cut 98%.

The company said its cargo capacity was had suffered less, dropping 60% because it was maximising the use of its dedicated freighter fleet, using empty passenger jets to carry cargo and doing ad-hoc charter flights.

Air freight rates have risen sharply as airlines have cut back on passenger capacity; in normal times, around 50% of air cargo is carried in the belly of passenger planes.

Reporting by Jamie Freed; Editing by Shri Navaratnam and Gerry Doyle

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