SIA to record S$123.6m one-off charge following NokScoot's 'likelihood of liquidation'

Published Fri, Jun 26, 2020 · 11:36 AM

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'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'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'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'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".