SINGAPORE - Singapore Airlines (SIA) announced on Friday (May 19) that it will re-integrate SIA Cargo, now a wholly-owned subsidiary, as a division within the group to improve efficiency "through greater synergy with the wider SIA Group."
The re-integration is expected to be completed in the first half of 2018.
The majority of its nearly 900 employees will be retained in the new cargo division, with some staff transferred to other SIA divisions.
"For a group of staff for whom alternative job positions have yet to be confirmed, placement opportunities will be facilitated elsewhere within the SIA Group," said SIA. "The integration will provide new opportunities for staff development within the larger SIA organisation."
SIA said it will be "business as usual from a customer perspective", as there will be no change to SIA Cargo's operations. Seven Boeing 747-400 Freighter aircraft will continue to be operated, while the Cargo Division will continue to manage the passenger aircraft 'bellyhold' space for SIA, SilkAir and Scoot.
It added that the reintegration is not expected to have a material impact on SIA's financial performance in 2017/18 financial year.
SIA announced on Thursday it had begun a wide-ranging review of its business to better position the group for long-term sustainable growth after reporting a surprise fourth-quarter loss of S$138.3 million, its first quarterly loss in five years.
One main drag was SIA Cargo's S$132 million provision for relating to a competition law case in the European Union.
SIA Cargo was a division of SIA until July 2001, when it became a separate company within the Group. SIA said that at the time, it was in the process of growing its fleet to up to 17 747-400Fs, and it was better suited to carry out its expansion as a standalone all-cargo airline.
"The airfreight market has since seen structural change, however, and SIA Cargo's freighter fleet has been 'right-sized' in recent years to the current seven aircraft while the proportion of revenue from passenger aircraft 'bellyhold' capacity has increased significantly," said SIA in its announcement.
It added that despite the smaller freighter fleet, SIA Cargo's overall capacity, including that from passenger aircraft, still grew 4-5 per cent in each of the past two financial years.