SINGAPORE Airlines announced on Friday that it will record a total one-off charge of S$123.6 million for the first quarter ending June 30,   following the likely liquidation of NokScoot, a 49-per-cent-owned associated company of Scoot Tigerair.

 

This comprises a S$106.9 million charge, mainly due to impairment of SIA&rsquo s book value of seven Boeing 777-200 aircraft which had been leased to NokScoot, and provisions by Scoot of S$16.7 million to cover its share of liquidation and related costs.

 

The carrying value of SIA&rsquo s investment in NokScoot has been fully written down in previous financial periods. Had the one-off charge of S$123.6 million occurred in the last financial year ended March 31, 2020 (FY2019/20), it would have widened SIA&rsquo s FY2019/20 loss-per-share of 17.9 cents by 10.4 cents, representing a 58.1 per cent fall. 

 

It would also have reduced SIA&rsquo s consolidated net tangible assets per share of 7.45 cents as at March 31, 2020 by 0.11 cents, representing a 1.5 per cent reduction.

 

NokScoot was established in Thailand in 2014 as a joint-venture medium- to long-haul, low-cost airline by Thailand-listed Nok Airlines Public Company and Scoot. Scoot said in a statement that the board of directors of NokScoot passed a resolution on Friday to liquidate the company. The resolution will be deliberated by shareholders at a general meeting that will be held in about 14 days.

 

This comes as NokScoot has not been able to record a full-year profit since its inception in 2014, said Scoot. This was largely attributed to difficulties growing the network and the competitive environment. The Covid-19 pandemic further challenged the airline. Scoot therefore " does not see a path to recovery and sustainable growth for NokScoot" .

 

While Scoot had offered to sell its 49-per-cent stake in NokScoot to Nok Air for a nominal sum of 1 Thai baht as an alternative, it was not taken up. 

Virgin Australia planes on the tarmac at Sydney Airport yesterday. Bain said it will strengthen the carrier' s regional services and continue serving business travellers, but the deal may face a further challenge from Virgin Australia' s bond holders, who this week submitted their own plan to swap their debt for new shares under an independent board. 

 

SYDNEY &bull Bain Capital agreed to buy collapsed Virgin Australia Holdings in one of the biggest single bets on the airline industry since it was shattered by the coronavirus pandemic.

 

Administrator Deloitte named Bain as the airline' s new owner yesterday, hours after Cyrus Capital Partners withdrew its bid.

 

The value of the deal was not disclosed, though Deloitte said there will be " a significant injection of capital" into the airline.

 

Deloitte said yesterday it is still not possible to determine how much of Virgin Australia' s debt can be recovered, though more details will come in a report to creditors due before the end of August.

 

Shareholders, though, will probably get nothing, Deloitte said.

 

Virgin Australia was almost entirely owned by four foreign aviation groups - Singapore Airlines, Etihad Airways, HNA Group and Nanshan Group - that each held 20 per cent stakes.

 

Tycoon Richard Branson' s Virgin Group owned about 10 per cent.

 

Bain' s investment is a brave bet on a sector enduring its biggest crisis ever, as well as on the Virgin Australia business itself.

 

Larger rival Qantas Airways this week depicted a bleak outlook, cutting 6,000 jobs, grounding about 100 planes and raising as much as A$1.9 billion (S$1.82 billion).

 

While domestic travel is slowly recovering, Australia' s government has said the country' s borders could be kept largely closed until next year.

 

Airlines worldwide are likely to lose US$84 billion (S$117 billion) and see their revenues halve this year, according to the International Air Transport Association, which expects 2020 to go down as the worst year financially in the history of aviation.

 

Virgin Australia collapsed in April under A$6.8 billion in borrowings as the outbreak halted global travel.

 

Even before virus-related curbs nearly froze revenue, Virgin Australia had lost money for seven consecutive years.

 

Deloitte' s decision ends an auction process that initially drew interest from more than 20 parties. Cyrus exited with a fiery attack on the sale process, accusing Deloitte of a " lack of engagement" since the US investment group submitted its takeover proposal on Monday.

 

In a separate statement, Bain said it will strengthen Virgin Australia' s regional services and continue serving business travellers.

 

Bain is backing managing director Paul Scurrah, who had already started to cut costs and simplify the airline when the virus struck.

 

The carrier' s headquarters will stay in Queensland.

 

Bain' s deal may face a further challenge from Virgin Australia' s bondholders, who this week submitted their own plan to swap their debt for new shares under an independent board.

 

The sale agreement with Bain still needs to be approved by creditors.

 

In April, Prime Minister Scott Morrison' s government refused to give the airline even A$200 million to survive, tipping Virgin Australia in alongside British carrier Flybe as one of the world' s highest-profile corporate casualties from the coronavirus.