Singapore Airlines 2016 Annual Report Download - page 158

Notes to the Financial Statements
31 March 2016
19 Borrowings and Long-Term Liabilities (in $ million) (continued)
Loans
A short-term loan of $8.8 million (2015: $9.3 million) is a revolving credit facility denominated in USD taken by a subsidiary company. The loan is
unsecured and bears a fixed interest ranging from 2.75% to 3.03% (FY2014/15: 2.75%) per annum. The current revolving credit facility is repayable
within 12 months aer the reporting date.
The other short-term loans of $181.6 million (2015: $83.7 million) are European Export Credit Agency (“ECA”) aircra financing loans denominated
in SGD taken by a subsidiary company. These are in the form of credit support, where a bank or other financial institution lends money to the
borrower with the loan guaranteed by the ECA. The secured bank loans are secured via assignment of the aircra purchase agreement, assignment
of engine warranty and credit agreement as well as mortgage of the aircra. The interest rates range from 1.18% to 4.11% (FY2014/15: 0.90%
to 4.11%) per annum and the loans are repayable within 12 months aer the reporting date.
A long-term loan of $24.5 million (2015: $23.9 million) denominated in USD taken by a subsidiary company is unsecured and bears an average
floating rate of 1.80% (FY2014/15: 1.47%) per annum, re-priced quarterly. This loan shall be repayable in 2022.
The other long-term loans of $88.2 million (2015: $223.3 million) are ECA aircra financing loans denominated in SGD taken by a subsidiary
company. The interest rates range from 1.18% to 4.11% per annum (FY2014/15: 0.90% to 4.11%) and the loans are repayable in 2023.
As part of the ECA financing arrangements with banks, special purpose entities (“SPE”) (Note 23) were incorporated. As at 31 March 2016, there
were ECA financing arrangements with banks to finance 11 aircra (2015: 11). Pursuant to the ECA financing, the legal ownership of the aircra
is vested in the SPEs. The subsidiary companies leased the aircra using finance lease arrangements with Falcon Aircra Limited and Winnie
Aircra Limited. The subsidiary companies have purchase options to acquire legal ownership of the aircra from the SPEs at the end of the lease
term at a bargain purchase option price.
The fair value of the loans amounted to $320.5 million as at 31 March 2016 (2015: $336.3 million).
Finance lease commitments
During the year, SIA Cargo had four B747-400 freighters on finance leases, of which SIA Cargo had elected the purchase option and purchased
two of the four freighters.
SIA Cargo holds two B747-400 freighters under finance leases, which mature between 2017 and 2018, without any options for renewal. One lease
has an option for SIA Cargo to purchase the aircra at the end of the lease period of 12 years. The remaining lease has an option for SIA Cargo
to purchase the aircra at the end of the 15th year of the lease period. Sub-leasing is allowed under the lease agreements.
The net carrying amounts approximate the fair value as the interest rate approximates the market rate.
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