Coronavirus pandemic

SIA cuts 96% of capacity as virus hammers industry

Countries around the world introduced fresh flight curbs Monday, meaning yet more airliners are stuck on the ground.
The flight information board at Changi Airport's Terminal 2 showing flight cancellations yesterday. SIA said it is especially vulnerable to international restrictions in air travel because it does not have a domestic segment. ST PHOTO: ARIFFIN JAMAR
The flight information board at Changi Airport's Terminal 2 showing flight cancellations yesterday. SIA said it is especially vulnerable to international restrictions in air travel because it does not have a domestic segment. ST PHOTO: ARIFFIN JAMAR

Airline announces deeper salary cuts for senior staff and compulsory no-pay leave

Singapore Airlines (SIA) is cutting 96 per cent of its scheduled capacity and further cutting salaries of senior employees as the Covid-19 pandemic continues to batter the industry.

SIA announced yesterday that it was slashing its capacity till the end of next month and grounding 138 out of 147 SIA and SilkAir aircraft.

The group's low-cost unit Scoot will also suspend most of its network, resulting in the grounding of 47 of its fleet of 49 aircraft.

Hours after the announcement, SIA chief executive Goh Choon Phong issued a staff circular on the latest cost-cutting moves.

In the note seen by The Straits Times, he said SIA management will take a second round of pay cuts. Instead of 15 per cent as previously announced, Mr Goh said he will take a 30 per cent cut from April 1.

Salary cuts for other affected senior staff will range from 10 per cent to 25 per cent. SIA board members will take a 30 per cent cut in their fees.

Mr Goh added that the airline has also reached an agreement with its unions on a set of cost-cutting measures.

These include varying days of compulsory no-pay leave every month for pilots, executives and associates, as well as furlough for staff on re-employment contracts.

The measures will impact about 10,000 staff.

For now, there are no plans for retrenchments, ST understands.

Before the latest measures, SIA had already rolled out a voluntary no-pay leave scheme to staff, including cabin crew.

As countries around the world, including Singapore, impose increasingly tight border controls to contain the spread of Covid-19, airlines have been hit hard.

SIA said it is especially vulnerable to international restrictions in air travel because it does not have a domestic segment.

 
 
 
 

"It is unclear when the SIA Group can begin to resume normal services, given the uncertainty as to when the stringent border controls will be lifted," the airline said in its statement when it announced the capacity cuts.

UOB Kay Hian's K. Ajith said that SIA could potentially lose over $140 million next month, and could be in a precarious position by end June without financial help from the Government.

The Centre for Asia Pacific Aviation has also estimated that about half of all global airlines could go bust before the year end as casualties of Covid-19. These include airlines in Australia and the United States.

In this travel-hostile environment, SIA said that it is actively taking steps to build up its liquidity, and to reduce capital expenditure and operating costs.

Talks are on with aircraft manufacturers to defer upcoming aircraft deliveries and, if agreed, to defer payment for those deliveries.

In the past few days, the SIA Group has drawn on its lines of credit to meet its immediate cash flow requirements, and it is in discussion with several financial institutions for its future funding, the airline said.

Captain Kenneth Lai, president of the Air Line Pilots Association - Singapore (Alpa-S) said: "This crisis is unprecedented and the most challenging situation SIA has ever encountered. As countries continue to expand border restrictions and with other challenges the company now faces, Alpa-S will work with management to do what is necessary to save the airline and protect jobs."

Until this crisis hit, SIA was the 15th largest airline group in the world, serving around 140 destinations in more than 35 countries and territories.

 
A version of this article appeared in the print edition of The Straits Times on March 24, 2020, with the headline 'SIA cuts 96% of capacity as virus hammers industry'. Print Edition | Subscribe