Singapore Airlines CEO signals job cuts loom in business review

Singapore Airlines has reported its first quarterly loss in five years and is under pressure to reduce costs and revamp its business amid intense competition from regional discount carriers and Middle-Eastern rivals.
Singapore Airlines has reported its first quarterly loss in five years and is under pressure to reduce costs and revamp its business amid intense competition from regional discount carriers and Middle-Eastern rivals.PHOTO: BLOOMBERG

CANCUN, MEXICO/SINGAPORE (BLOOMBERG) - Singapore Airlines has said jobs are likely to be cut as part of a business review South-east Asia's biggest carrier has kicked off to revive earnings following a surprise quarterly loss.

The premium carrier's staff is aware headcount reduction is possible under the process, chief executive officer Goh Choon Phong told reporters on Tuesday (June 6) at the annual meeting of the International Air Transport Association in Cancun, Mexico. The group, including affiliates and units, employed an average 24,350 workers at the end of March 2016.

Some jobs may become "irrelevant", while some workers may need new skills for different tasks, Mr Goh said, adding that it is too early to provide numbers. The review process that covers the carrier's fleet and network started more than six months ago, and SIA has hired external advisers for help, he said.

SIA, which reported its first quarterly loss in five years, is under pressure to reduce costs and revamp its business amid intense competition from regional discount carriers and Middle-Eastern rivals. Asia's other marquee carrier - Cathay Pacific Airways - said last month that it would eliminate 600 jobs in Hong Kong as part of the biggest business revamp in two decades as it slipped into a loss for the first time in eight years.

 

Predicting a challenging 2017, with passenger and cargo yields - a key measure of profitability in the industry - under stress, SIA said in May that it has set up a dedicated transformation office to conduct a "wide-ranging review" to better position the group for long-term, sustainable growth.

 

The aim of the process is to reshape the business "that continues to deliver high-quality products and services, though with a significantly improved cost base and higher levels of efficiency", it said in a statement on May 18.

The net loss in the quarter through March was $138.3 million, the first since the same period in 2012. The company took a provision of $132 million in the period for competition-related matters.

Shares of SIA - the only Asian airline to have flown the Concorde and the first in the world to fly the A-380 superjumbo - have risen 3.4 per cent this year, lagging behind the 21 per cent gains for the Bloomberg Asia-Pacific Airlines Index.

Hong Kong-based Cathay Pacific has set a target to save 30 per cent in employee costs at its head office.