Singapore Airlines 2010 Annual Report Download - page 146
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SINGAPORE AIRLINES
144
notes to the financial statements
31 march 2010
18 Long-Term Liabilities and Provisions (in $ million) (continued)
Loans (continued)
There were also two unsecured term loans amounting to $3.4 million, which commenced on 10 April 2003 and
26 February 2008, and were repayable in 240 and 60 instalments respectively. Interest on the unsecured term loans
were charged at the bank’s prevailing prime rate on monthly rest. The effective interest rates ranged from 4.20% to
4.50% per annum.
The Group
31 March
2010 2009
Not later than one year - 32.7
Later than one year but not later than five years - 9.2
Later than five years - 2.1
- 44.0
Finance leases commitments
Singapore Airlines Cargo Pte Ltd (“SIA Cargo”) holds four B747-400 freighters under finance leases, which will mature
between 2014 and 2018, without any options for renewal. Three leases have options for SIA Cargo to purchase the
aircraft at the end of the lease period of 12 years. The fourth lease has an option for SIA Cargo to purchase the aircraft
at the end of the 12th or 15th year of the lease period. Sub-leasing is allowed under the lease agreements.
The financing obligations for the first five years of three leases are secured by an aircraft pledged as collateral, until
2011. Replacement of the aircraft pledged as collateral by another aircraft is permitted under the mortgage agreement.
Interest rates on three of SIA Cargo’s finance lease commitments are charged at a margin above the London Interbank
Offered Rate (“LIBOR”). These ranged from 0.29% to 2.46% (2008-09: 2.20% to 3.78%) per annum. The interest rate
on the remaining SIA Cargo’s finance lease commitment is fixed at 5.81% (2008-09: 5.81%) per annum.
SIA Cargo continues to remain the primary obligor under the lease agreements and as such, there are unpaid lease
commitments of $87.8 million (2009: $95.4 million) as at 31 March 2010. Out of this, $59.1 million (2009: $60.8 million)
are covered by funds placed with financial institutions under defeasance to provide for payments due at time of exercise
of purchase option at the end of the 12th year or 15th year of the lease period. The funds placed with financial institutions
are expected to generate interest in order to meet the obligation at time of maturity. These arrangements have not been
included in the financial statements.
The SIAEC Group has finance leases for certain equipment and vehicles which will mature between 2010 and 2011.