Singapore Air Plans Bond Sale Amid Travel Decline

Singapore Airlines Ltd. is planning its first bond sale, bankers involved say, after the company warned that a decline in air travel may lead to its first annual loss since going public in 1985.

The proposed sale comes as Asia’s third-biggest airline loses business after September’s terrorist attacks on the U.S. It posted an 88% decline in profit in its first half, ended Sept. 30, and ended the period owing $66 million to lenders, compared with the $76 million in cash it held six months ago.

Singapore Air invited six banks to help it sell bonds by year-end, with the amount to be determined. The debt will be in Singapore dollars. Most banks invited to manage the sale are active in the Singapore bond market, including Citicorp Investment Bank, DBS Group Holdings, J.P. Morgan Chase & Co. and Oversea-Chinese Banking Corp.

“For a company that’s well-known to have a strong balance sheet to raise debt may have some negative connotations,” said Cher Hung Jin, who helps manage $200million in assets, including Singapore Airlines shares, at Daiwa SB Investments (Singapore).

Singapore Airlines spokesman Derrick Chiang declined comment, as did representatives from banks involved in the bond sale.

Some analysts said it’s a good time for Singapore Airlines to raise money, which it might use to make purchases as other carriers struggle after the terrorist attacks. Most major U.S. carriers posted losses for the period ended Sept. 30.