FINANCIAL IMPLICATIONS FOR SIA RESULTING FROM RECAPITALISATION OF AIR NEW ZEALAND

Singapore Airlines (“SIA”) wishes to make the following statement on the financial implications for SIA resulting from the just-announced recapitalisation of Air New Zealand, in which SIA has a 25% equity interest.

As Air New Zealand has recognised further losses amounting to approximately NZ$350 million arising from the closure of Ansett, under equity accounting principles there will be a further charge of S$62.9 million to the SIA Group’s profit & loss account. SIA’s carrying cost of the investment in Air New Zealand will be down to S$28.3 million consequently.

Under the recapitalisation package, Air New Zealand will not seek further capital from SIA.

If the Government of New Zealand invests, in the first instance, the full amount of NZ$585 million in new ordinary shares in Air New Zealand at the indicative unit price of NZ$0.24 given in Air New Zealand’s announcement, SIA’s interest in the enlarged share capital of Air New Zealand will be reduced to 5.9% by end January 2002. If subsequently the loan of NZ$300 million from the Government of New Zealand is converted into ordinary Air New Zealand shares, also at the indicative unit price of NZ$0.24, SIA’s interest will be further diluted to 4.25%. SIA’s eventual percentage shareholding in Air New Zealand will be determined by the size of the investments and the price at which the shares are issued to the Government of New Zealand in due course.

It should be noted that the above assessment is based on Air New Zealand’s unaudited results and that the recapitalisation programme is contingent on an agreement that is subject to the approval of Ansett creditors and of the Federal Court of Australia, and approval by Air New Zealand shareholders will also be required, among other conditions.