IVEY Publishing BONUS W26385 SINGAPORE AIRLINES: SURVIVING THE COVID-19 PANDEMIC' Professor Notin Pangerker wrote this case solely to provide materiel for class discussion. The authors do not intend to bustrate either effective of ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies of request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, NBG ON1; (1) 519.681.3208, fe) casesalivey.ca, www.iveypublishing.ca. Our goal is to publish materials of the highest quality, submit any errata to publisheases davey ca. Copyright @ 2022, National University of Singapore and Ivey Business School Foundation Version: 2022-04-12 In August 2021, Singapore Airlines Group (SIA) was at a critical juncture in its history. The COVID-19 pandemic that had been raging around the world since early 2020 had ground commercial travel to an almost complete halt, forcing SIA to idle most of its planes (see Exhibit 1). For the 2020/21 financial year, SIA's passenger revenues had declined 94.7 per cent to $$684.7 million," although the decline was partially offset by a 38.8 per cent increase in revenues from cargo and mail, which earned $2.8 billion. Overall, revenues had declined by 76 per cent, resulting in a loss of $4.27 billion.' The massive bleed of cash because of the back-to-back yearly losses had forced the group to issue new capital, thus diluting the stake of its existing shareholders (see Exhibit 2).' SIA's results had improved for the quarter ending June 2021, but the emergence of new virus variants and continued travel restrictions meant that SIA needed to make critical decisions that would have implications for its short-term survival and long-term performance. HISTORICAL BACKGROUND, STRATEGY, AND PERFORMANCE SIA's roots went back to the formation of Malayan Airways Lid., which had its first flight from Singapore's Kallang Airport in 1947. In 1966, Malaysia-Singapore Airlines, a joint venture of the governments of Singapore and Malaysia, became the successor to Malayan Airways. In 1972, Malaysia-Singapore Airlines split into two, with Malaysia Airlines System focusing mostly on domestic and short-haul routes and SIA focusing on international and long-haul routes.' The Singapore government provided the initial base of capital to SIA, and almost 50 years after SIA's separation from Malaysia Singapore Airlines, the government continued to hold as much as 56 per cent of equity in the airline through its investment vehicle, Temasek Holdings. Because SIA was based in a city-state without a hinterland, it lacked the cushion of a baseload of domestic demand. Instead, SIA made the strategic decision at its inception to distinguish itself by becoming a premium carrier offering differentiated services. Even as a young airline, it placed several large orders for the latest planes, thus creating a buzz in the industry and taking the first step toward creating a global reputation and a premium image in customers' minds.' Recognizing that open-skies agreements were critical to establishing Singapore as a hub in the Asia Pacific, the Singapore government proactively pursued such agreements. By 2021, it had agreements with as many This document is authorized for use only by Kaye Anne Labtingas in MGMT 8900 taught by Charles Chen, Hawai Pacific University from May 2023 10 Aug 2023.Page 10 W26385 EXHIBIT 4: PLANNED CAPITAL EXPENDITURES OF THE SINGAPORE AIRLINES GROUP Projected Capital Expenditure Revised Capital Expenditure Financial fear Total For Aircraft For Other For Aircraft For Other Total Assets Assets 2020/21 5,000 300 5,300 2,800 300 3.100 2021/22 5,400 300 5,700 3,700 300 4.000 2022/23 4,500 200 4,700 4,100 400 4.500 2023/24 4,300 200 4,500 3,800 300 4.100 2024/25 4,000 200 4,200 4,000 300 4 300 Note: Figures in S$ millions. Source: Singapore Airlines, "Singapore Airlines Defers Over $4 Billion in Capital Expenditure on Aircraft Delivery Agreements," press release, Singapore Airlines, February 9, 2021, https /www.singaporeair.com/en_UK/vr/media- centre/press-release/article/?quen_UK/2021/January-Marche0621-210209. This document is authorized for use only by Kaye Anne Labtingso in MGMT 6800 sought by Charles Chen, Hawaii Pacific University from May 2023 to Aug 2023.Page 2 W26385 as seventy countries. In 2001, Singapore also became a party to the Multilateral Agreement on the Liberalization of International Air Transportation, a landmark multilateral open-skies agreement to liberalize international air transport." The bilateral and multilateral air service agreements exposed SIA to more competition because international airlines were keen to fly in and out of Singapore, but the agreements also offered SIA opportunities to gain new customers and develop a strong reputation. The airline's development was closely tied to Singapore's economic development. The Singapore government invested heavily in building an excellent infrastructure in the form of the Changi Airport. The country's robust economic performance, with high levels of trade and investment flowing in and out of Singapore, boosted the number of business travellers who formed a key clientele for SIA. Singapore's tourist-friendly policies also attracted several million tourists every year." Since its inception, SIA had recognized the importance of training in its strategy of becoming a premium carrier; hence, it allocated substantial resources to it. By 2021, it operated the Singapore Airlines Academy, which not only trained SIA's own employees in various aspects, including service excellence, but also offered its expertise to organizations in a variety of industries ranging from logistics, hospitality, retail, and food and beverage to health care, banking and finance, automotive, and education."" SIA was also open-minded in its pursuit of innovative ideas to improve its customer service, borrowing not only from airlines, but from other industries as well, such as hotels and restaurants." Over the first thirty years of its existence, SIA pioneered a number of service innovations in the airline industry. In 1999, it became the first airline in the world to offer Dolby Headphone "surround sound" as a new feature of its inflight entertainment. SIA also pioneered what was then a cutting-edge entertainment system, Kris World. KrisWorld included twenty-two video channels; video games; and Reuters Teletext news, which was updated hourly. By early 2008, Kris World was offering 1,000 entertainment options across the various fare categories. SIA was also the first airline to put the A380, a $55-seat superjumbo jet, into service. Building a strong brand reputation formed the other leg of SIA's differentiation strategy. To this end, the airline paid great attention to developing advertising campaigns that highlighted its young fleet, providing connectivity through its extensive network, and offering an exceptional inflight experience provided by its well-trained crew."SIA's attention to details also helped its branding. For instance, SIA hired noted French designer Pierre Balmain to design a distinctive uniform (the sarong kebaya) for its female crew members. Over time, the "Singapore Girl" came to embody "the caring aspect, the graciousness, warmth and efficiency of the brand *14 In a typical year, SIA won numerous accolades for its superior service. For example, in 2020, it won twenty- six awards from international panels, including DestinAsian's Readers' Choice Award for "Best Airlines Overall," awarded to SIA for the fifteenth consecutive year, and Travel+Leisure's "World's Best International Airlines," awarded for the twenty-fifth year." SIA managed to keep its costs relatively low while maintaining high levels of differentiation. Its young fleet helped it achieve both differentiation and low costs because younger planes were more fuel efficient, needed less maintenance, and had fewer unanticipated breakdowns. SIA also managed to avoid high staff costs while maintaining good service levels, partly because it was based in Asia, which had lower wage rates, and because it had invested in improving employee productivity. This successful balance was the secret to SIA's consistently good profitability over more than forty years."* Although the premium airline operations formed SIA's core business, the group also had several other operations, including a regional airline that flew to mostly holiday destinations (formerly SilkAir Singapore This document is authorized for use only by Kaye Anne Labtingso in MGMT 6900 taught by Charles Chen, Hawaii Pacific University from May 2023 10 Aug 2023.Page 3 W26385 Pie. Lid., which was merged with the Singapore Airlines brand in February 2021) and budget airline Scoot Tigerair Pte. Lid. (which included the former Tiger Airways, SIA's first venture into the budget airline space), as well as stakes in an engineering company (SIA Engineering Company Lid.) and a ground handling company (SATS Ltd.)." THE COVID-19 PANDEMIC AND THE AIRLINE INDUSTRY On December 31, 2019, the Chinese government confirmed that dozens of people were being treated in Wuhan for infection by a new virus. The first death was reported on January 11, 2020. Within the next week, several countries, including Japan, South Korea, Thailand, and the United States, had confirmed cases, and on January 30, 2020, the World Health Organization (WHO) declared the virus as a global health emergency. In February 2020, WHO named the disease caused by the virus as COVID-19." Over the next few months, the pandemic spread rapidly in the rest of the world, and by the end of March 2020, there were more than 857,000 cases around the world." As the hospitalizations and the death toll mounted, governments around the world clamped down on travel in a bid to prevent the spread of the virus, which took place through human contact. By April 2020, over one hundred countries had instituted full or partial lockdowns. COVID-19 first reached Singapore on January 23, 2020, with the arrival of a 66-year-old Chinese tourist from Wuhan."By the end of February, the number of daily new COVID-19 cases in Singapore had quickly risen to more than one hundred. Even before the crisis, the airline industry had struggled to make consistent profits because it was buffeted by forces such as severe competition (including from state-supported or subsidized players); demand fluctuations because of factors outside airlines' control (such as economic cycles, events impacting public health such as the severe acute respiratory syndrome [SARS] epidemic in 2003, and geopolitical events such as wars); and unpredictable oil prices. The COVID-19 pandemic, however, proved to be a cataclysmic event unlike any other in recent memory." As airports around the world closed, travel-especially international travel-plunged, decimating airline revenues. In January 2021, the International Civil Aviation Organization reported that, for the year 2020, seat capacity fell by 50 per cent, passenger numbers dropped by 60 per cent (to 1.8 billion versus 4.5 billion in 2019), and revenue losses totalled US$370 billion (see Exhibit 3). The fall in international traffic was even more pronounced, at 74 per cent, to 1.5 billion passengers, and Asia Pacific experienced the largest declines in number of passengers (916 million) and revenues (US$120 billion)." According to the International Air Transport Association (IATA), up to US$200 billion of financial aid and cash injections were needed to save the global airlines industry from collapse." In November 2020, Alexandre de Juniac, IATA's director general declared, This crisis is devastating and unrelenting. . . . Airlines have cut costs 45.8% but revenues are down 60.9%. The result is that airlines will lose [US]$66 for every passenger carried this year for a total net loss of $118.5 billion. This loss will be reduced sharply by $80 billion in 2021. But the prospect of losing $38.7 billion next year is nothing to celebrate. We need to get borders safely re-opened without quarantine so that people will fly again. And with airlines expected to bleed cash at least until the fourth quarter of 2021, there is no time to lose.2% This document is authorized for use only by Kaye Anne Labtingso in MGMT 6800 taught by Charles Chen, Hawaii Pacific University from May 2023 10 Aug 2023.Page 4 W26385 Even in late 2021, more than twenty-one months after the start of crisis, travel restrictions remained in place in many parts of the world, especially Asia,"" which was of special relevance to SIA because a large proportion of its flights connected Asian cities to one other and to the rest of the world." As the volume of travel dried up, several airlines faced liquidity issues. In response, major carriers such as United Airlines announced layoffs of pilots and flight attendants and entered sale and leaseback agreements to increase financial flexibility." Even airlines that were performing well before the crisis, such as Emirates, postponed or cancelled discretionary expenditures to reduce their operating expenses." Other airlines had to resort to drastic actions such as entering administration or even declaring bankruptcy. These airlines included some of the largest in Latin America, such as Aeromexico, Avianca, and LATAM, as well as notable airlines such as Thai Airways, Virgin Australia, South African Airways, and Flybe." Unlike airlines that were able to fall back on demand from domestic travel, the situation was far more challenging for SIA because Singapore had no hinterland. The situation forced SIA to ground 96 per cent of its fleet, or 138 out of 147 planes." When he announced the drastic cost-cutting measures that SIA was forced to take, the group's chief executive officer, Goh Choon Pong, called it "the greatest challenge in the SIA's Group's existence.""Even when there was a small bounce-back in revenues because of an increase in essential flights and transport of essential cargo such as masks, the revenues remained a small proportion of the pre-pandemic numbers." SIA'S RESPONSE In the face of this crisis, Goh and his team at SIA devised several key strategies based on three broad thrusts: reducing costs, generating new revenue streams, and fortifying SIA's balance sheet. With demand plummeting, the first and foremost concern for SIA was cutting costs to reduce the cash bleed Initially, the company had a two-pronged strategy: implement pay cuts for employees, with senior managers taking larger pay cuts, and retire eligible staff carly." However, by September 2020, SIA had to resort to layoffs. Although the layoffs were widely anticipated in view of the plunging travel demand, it was a "painfully difficult decision" for Goh, the toughest one that he had had to make in his thirty years at SIA. Eventually, SIA eliminated 4,300 jobs, of which 2,400 were job cuts; the rest were hiring freezes and early retirements.* SIA also tried to limit future expenses by deferring projects that were non-essential and negotiating with aircraft manufacturers to reschedule payments for SIA's existing aircraft orders. "It forged agreements with Airbus SE and the Boeing Company to defer capital expenditures of more than $4 billion for the 2020/21 and 2021/22 financial years (see Exhibit 4). In a mutually beneficial arrangement, SIA cabin crew were redeployed to other sectors such as low-risk general wards of hospitals. The Jobs Support Scheme launched by the government of Singapore covered 75 per cent of the monthly salary of the flight attendants, with the remaining 25 per cent paid by the hospitals." SIA also declined to join the India-based Tata Group in its bid to acquire India's struggling national carrier, Air India." As well, SIA looked to several alternatives to generate revenues. It converted some of its flights to transport essential goods such as masks, medicines, or other goods that were in high demand." Similar to airlines in Japan, Australia, Taiwan, and Brunei, SIA considered "flights to nowhere"-scenic flights that began and ended at Singapore's Changi Airport." But many environmentalists and concerned citizens argued that "flights to nowhere" entailed carbon-intensive travel without any real purpose and were merely a "stop-gap measure that distracts from the policy and value shifts necessary to mitigate the climate crisis."SIA executives attempted to explain that there were other less visible benefits to these flights-such as helping This document is authorized for use only by Kaye Anne Labtingso in MGMT 8900 taught by Charles Chen, Hawai Pacific University from May 2023 10 Aug 2023.Page 5 W26385 pilots and the crew staff gain crucial flight experience and continuing service on the aircraft's equipment- but the explanations did not gain much acceptance, and SIA cancelled the flights." Another SIA strategy, "Discover Your Singapore Airlines," proved to be less controversial and more successful. It involved customers dining on board an A380 Airbus specially converted into a restaurant and parked at Changi Airport; visiting the SIA Training Centre; and purchasing inflight meals, to be delivered to their homes." All the available seats for the dining event were sold out within 30 minutes of opening the bookings, and SIA even added two additional dates to open more slots." Visitors opting for the tour of the SIA Training Centre were able to view flight simulators, interact with the crew, and take part in several activities. For an additional charge, visitors could also test the flight simulators and enjoy a wine appreciation session. In addition to generating additional revenue (albeit a small one compared to the lost revenues), SIA hoped to remain engaged with its customers through these initiatives." CAPITAL RAISING Given the cash bleed, SIA had to strengthen its financial position and balance sheet. On June 5, 2020, it successfully raised $8.8 billion using a combination of new ordinary shares and 10-year mandatory convertible bonds (MCBs)." The MCBs (worth $3.5 billion) accrued interest that was payable on redemption; the interest rate on unredeemed bonds increased over time to a maximum value of $1.806 at the end of the tenth year. SIA had the option of choosing when the bonds could be redeemed and whether to convert unredeemed MCBs into equity shares at the end of the tenure at a pre-fixed price of $4.84 per share. One analyst estimated that the equity issued raised the number of SIA's shares from 1.185 billion to 2.965 billion. If the MCBs were converted into shares at the end of the tenth year, the share count would further increase to 3.6 billion." Of the $8.8 billion raised under the rights issue, SIA planned to use $3.7 billion as operating cash flows to fund items such as fixed costs and other operating expenses, put $3.3 billion toward aircraft purchases and aircraft-related payments, and use $1.8 billion for debt servicing and other contractual payments. Shareholders also voted to allow the airline to issue up to $6.2 billion of additional MCBs on similar terms, to be offered to shareholders through one or more rights issues later." The additional rights issue for $6.2 billion was launched and completed in May 2021. If the MCBs were not redeemed before maturity and were instead converted into shares, the issue would further increase SIA's share count to 6.446 billion." During the same month, the company also raised $2 billion from the sale and leaseback of eleven planes." SIA was also aided by the Singapore government, which announced support measures to mitigate the impact of COVID-19 on the aviation sector. The government pledged more than $750 million to support local wages and to fund measures such as rebates on landing and parking charges, rental relief for airlines, ground handlers, and cargo agents." THE ROAD AHEAD SIA faced a challenging road ahead. Many of the environmental changes that had happened over the previous two years were likely to adversely impact the industry and, thus, the company. These included the widespread adoption of video conferencing, concerns about the environmental impact of air travel, and more stringent health and safety regulations. The pandemic had accelerated the adoption of video conferencing tools such as Zoom, Skype, Microsoft Teams, and Google Meet. The rapid improvement in these tools' capabilities meant that there was a good This document is authorized for use only by Kaye Anne Labtingso in MGMT 8900 taught by Charles Chen, Hawaii Pacific University from May 2023 10 Aug 2023.Page 6 W26385 possibility that some business meetings would continue online even when pandemic restrictions were cased, thus reducing the long-term demand for business travel, an attractive customer segment for the airlines." Technology did not offer any substitute for leisure travel; hence, the post-pandemic pent-up demand for leisure travel could be substantial. Even in this scenario, however, full-service airlines such as SIA faced a few challenges. First, leisure travellers were typically price conscious and attracting them would often mean discounting fares and diluting yields. Second, it was quite likely that a good proportion of leisure travel demand would go to budget carriers such as Air Asia. While SIA had its own budget brand (Scoot), it was neither a leading player nor consistently profitable in its relatively short history. Concerns about the ecological environment could also impact the future demand for air travel. Air travel had been identified as having a large carbon footprint; flight emissions contributed 2.4 per cent of all carbon dioxide emissions in 2018." Based on the assumption that airlines would not make big technological breakthroughs and that other industries would continue to reduce their carbon footprints, the International Civil Aviation Organization estimated that aviation would contribute 27 per cent to global emissions by 2050. Many environmentalists were opposed to air travel other than for essential purposes, and if the environmental concerns became widespread, the demand for air travel would be adversely affected. While the environmental impact could be partially mitigated by adopting ever newer planes and technologies, such acquisitions could be capital intensive, and it could be several years before the new technologies materialized." Another key trend in the airline industry was the need for greater safety and hygiene, which would affect airlines in many ways. Beyond the direct impact of additional expenditures (e.g., the use of HEPA filters that could remove even the smallest particles and droplets from cabin air), greater safety and hygiene could also reduce operational efficiency; for example, social distancing would slow the boarding and deplaning process, and deep cleaning would increase the turnaround time for flights. There were also additional implications for airlines such as SIA that pursued a service-based differentiation strategy. If flight attendants donned personal protective equipment, it could potentially dilute the Singapore Girl image, which was inextricably linked with SIA's perception of superior service. Constraints on inflight service such as the type of meal service that could be offered, although less likely to be implemented in the long term, could further challenge SIA's ability to maintain differentiation through service. The group had been proactive with safety and hygiene and had been recognized by Airline Passenger Experience Association (APEX) and SimpliFlying for its efforts with a diamond rating-the highest attainable-for both its brands, SIA and Scoot." Whether this would help its brand reputation or its results in the long term remained unclear. SIA also faced several challenges that were specific to its own strategy and situation. A key challenge related to fleet renewal. SIA had always taken pride in having one of the youngest fleets in the industry. Although it meant that SIA had to incur heavy capital expenditures, a younger fleet also saved money on maintenance and fuel." For the 2020/21 year, because of the pandemic, the group had registered a charge of $1.734 billion for forty-five surplus aircraft, " and the group had adjusted its planned capital expenditures significantly for the 2020/21 and 2021/22 years in view of the new environment. But SIA had not moderated capital expenditures for the financial year 2023/24 and beyond, which could prove to be challenging unless international travel bounced back strongly (see Exhibit 4). Singapore government policy on the management of the pandemic posed yet another challenge. While the low number of deaths caused by COVID-19 in Singapore was a source of pride for the country and government, the continued pursuit of low numbers-especially through strict border control measures- would hurt travel volumes." There was also a real possibility that other airlines, such as Qatar Airways and This document is authorized for use only by Kaye Anne Labtingso in MGMT 6800 taught by Charles Chen, Hawaii Pacific University from May 2023 10 Aug 2023.Page 7 W26385 Emirates, whose home countries were less strict than Singapore on the border control measures, would be able to forge ahead of SIA. " Because of multiple capital-raising efforts, SIA's balance sheet had become structurally different (with lower retained earnings and a higher base of equity) over the course of the pandemic, posing a challenge in delivering returns on the group's share price. If the pandemic dragged on and the enlarged based of equity capital was eroded, future fleet acquisitions might need to be financed with debt, thus raising the interest burden and financial risk. Another difficult decision regarded the hedging of fuel contracts. While hedging protected SIA from increasing fuel prices, it could lead to losses when fuel prices fell or were depressed. Recently, SIA had incurred large losses from hedging, which created a dilemma regarding whether the airline should continue to use hedging strategies in the future." In an environment of lower profitability, hedging losses could cut deeper than in the past A third challenge related to the continuation of SIA's service-based differentiation strategy. Historically, good employee morale had been the foundation of SIA's superior service and its differentiation strategy. But cost and job cuts undertaken during the pandemic had likely undermined employee morale. Restoring the morale would be a challenge, likely to be further compounded by difficulties in keeping up investments in other critical aspects such as training and fleet renewal, which also helped in achieving a differentiated brand image. SIA had taken tiny steps toward restoring morale by reversing some of the pay cuts for employees while senior management continued with their pay cut." Should SIA continue to pursue a high level of differentiation-in a space that was becoming increasingly crowded with the likes of Emirates, Qatar Airways, and Etihad Airways following similar strategies"-or should it try a new strategy, such as a lower level of differentiation that would require fewer investments and possibly carry less risk? For the first quarter of 2021/22 (ending June 30, 2021), SIA showed improved metrics: its revenues had grown from $851 million in the comparable quarter a year earlier to $1,295 million; its net loss had narrowed from $1,123 million in 2020/21 to $409 million in 2021/22; and the company had ended the quarter with $13.7 billion in cash and bank balances." Passenger revenue had grown to $318 million (from $41 million a year earlier) because some countries, especially those where large proportions of the population had received COVID-19 vaccines, were opening to international travel." International travel faced significant uncertainties in the near term, however, because of the dynamic situation relating to the course of the pandemic; it could be several years before traffic would return to pre-crisis levels." To deal with the highly uncertain environment, SIA needed to carefully consider decisions such as route rationalization, fleet upgrading and renewal, and people management over the next couple of years, since they would have long-term implications for SIA's performance and possibly even its survival. This document is authorized for use only by Kaye Anne Labtingso in MGMT 6800 taught by Charles Chen, Hawaii Pacific University from May 2023 10 Aug 2023.Page 8 W26385 EXHIBIT 1: ANNUAL GROWTH IN GLOBAL AIR TRAFFIC DEMAND FROM 2006-2021 40 26 20 6.4 5.7 7 2.4 4.1 4.1 -65.9 200 200 2009 2010 2011 2012 201 201 2012 2019 202 2020 pre-COVID Percentage Growth 20 2020 post-COVE -80 Year Source: E. Mazareanu, "Annual Growth in Global Air Traffic Passenger Demand from 2006 to 2022," Statista, October 5. 2021, https://www.statista.com/statistics/193533/growth-of-global-air-traffic-passenger-demand. This document is authorized for use only by Kaye Anne Lebtingso in MGMT 6800 taught by Charles Chen, Hawaii Pacific University from May 2023 10 Aug 2023.Page 9 W26385 EXHIBIT 2: FINANCIAL PERFORMANCE OF THE SINGAPORE AIRLINES GROUP Income Statement FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 Revenue 14.868.5 15,806.1 16,323.2 15,975.9 3.815.9 Expenditure 14.245.7 14,257.3 15,256.1 15,916.8 6.328.4 Operating profit 622.8 1,548.8 1,067-1 59.1 -2.512.5 (Loss)/profit before taxation 518.6 1,593.2 868.6 -220.2 -4.957.2 (Loss)/profit attributable to owners 360.4 1,301.6 682 7 -212.0 -4.270.7 of the company Balance Sheet, Year Ending March 31st 2017 2018 2019 2020 2021 Share capital 1.856.1 1,856.1 1,856.1 1,856.1 7,180.2 Total equity 13.470.2 13,228.4 13,683.2 9,732.7 16,278.1 Property, plant, and equipment 16.433.1 18,169.2 22,176.3 25,485.8 23,483.3 Current assets 5,700.0 4,967.0 5,499.7 4,842.9 9,672.0 Current liabilities 6.288.6 6,565.7 7,378.4 10,509.1 5,221.8 Total assets 24,720.0 25,892.5 30,505.2 33,712.8 37,581.3 Total liabilities 11.249.8 12,664.1 16,822 0 23,980.1 21,303.2 Net assets 13.470.2 13,228.4 13,683.2 9,732.7 16,278.1 Note: Figures in S$ millions; FY = financial (or fiscal) year. Source: Singapore Airlines, Annual Report FY2020-21, 213-214, September 20, 2021, https://www.singaporeair.com/saar5/pdf/Investor-Relations/Annual-Report/annualreport2021.pdf. EXHIBIT 3: IMPACT OF THE PANDEMIC ON TRAVEL, BY REGION Region Change in Capacity (%) Change in Number of Change in Airlines' Passengers (in millions) Revenues (in US$ billions) Global -50 -2.700 -370 North America -43 -596 -84 Latin America and the -43 -198 -26 Caribbean Africa -58 -78 -14 Middle East -60 -132 -22 Europe -58 -770 -100 Asia and Pacific -45 -916 -120 Note: Figures refer to the traffic changes for airlines based in each respective geographical region. Source: International Civil Aviation Organization, "2020 Passenger Totals Drop 60 Percent as COVID-19 Assault on International Mobility Continues," press release, ICAO, January 15, 2021, https://www.icao.int/Newsroom/Pages/2020- passenger-totals-drop-60-percent-as-COVID19-assault-on-international-mobility-continues.aspx. 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