SIA share price to rock or melt with Special Share?

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The once-in-a-century pandemic crisis has sparked a meltdown in SIA share price. Over the decades, SIA share price had endured the threats from Asia Financial Crisis (1997), 9/11 terrorist attacks (2001), SARS (2003) and the Great Financial Crisis of 2008). But the current COVID-19 crisis is unprecedented and provide a formidable challenge for the national carrier.

SIA share price crashed into wall

SIA share price nearing 20-year low

SIA share price in crisis mode

It seems that SIA share price is forced into a corner as various countries imposed travel restrictions and lockdowns to curb the spread of the virus. On 22 March 2020, Singapore government barred all short-term visitors from entering or transiting through Singapore. The latest measure will be the final nail in the coffin for SIA share price.

The slew of border control restrictions had led to SIA cutting flight capacity. At this point of writing, SIA Group had slashed 96% of its capacity till end April and grounded 138 of its parent and SilkAir aircraft. The latest development is pushing SIA share price to the edge of the cliff.

Given the grim outlook for SIA share price, will Singapore government intervene? Being the pride of our nation, Singapore Airlines is definitely a strategic asset that we cannot afford to lose. Apart from being a national icon, Singapore Airlines and it supply chain also employ hundred of thousands of people. The collapse of the airline will surely lead to a massive retrenchment in Singapore.

Question now is: will SIA invoke the one Special Share that is held by the Ministry of Finance. In the past 20 years, SIA had sought billion dollars bailouts from Singapore government on several occasions. Incidentally, the last time that SIA invoked this Special Share was during the SARS period (2003). How does this Special Share scheme work and will it really salvage SIA share price? In this article, I will share more details on the destiny of SIA share price.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in SIA before. Whether SIA share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.


SIA share price in state of emergency

In my opinion, the swift meltdown of SIA share price is unnerving to investors and warrants quick intervention from Singapore government. Bailout is essential to prevent the situation getting out of control and I am all for the bailout of SIA share price because current situation is not the fault of management nor within their control.

The coronavirus, coupled with the collapse of oil price, pose a challenge that is unprecedented for Singapore Airlines. The loss of flight capacity could drain at least $500 million of cash  for the Group while the collapse of oil price could cost SIA an estimated $500 million hedging loss. To preserve SIA share price, the government should pump in at least $3 billion like what it did in the FY1999/00 through the SIA Special Share.

The SIA Special Share is allocated to the Ministry of Finance to ensure that Singapore Airlines [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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