SIA cuts pay of all staff by at least 10%; offers early retirement for ground staff, pilots

Singapore Airlines cabin crew in the transit area at Changi Airport Terminal 3 on June 12, 2020.
Singapore Airlines cabin crew in the transit area at Changi Airport Terminal 3 on June 12, 2020.ST PHOTO: LIM YAOHUI

SINGAPORE - Singapore Airlines (SIA) will be taking more drastic measures to rein in costs, including bigger pay cuts for the management, a 10 per cent salary reduction for other staff, and early retirement for ground staff and pilots.

The full quantum of the monthly variable component of salaries will be cut from Saturday (Aug 1), in accordance with the group's collective agreements with its unions after the first-quarter operating loss for SIA and its regional full-service arm SilkAir.

This amounts to 10 per cent of the basic salary for all staff below the level of manager, said SIA chief Goh Choon Phong in a notice to staff this week.

All staff who are at manager level and above will also have the cuts on their basic salary increased from Saturday.

Managers and senior managers will take a 12 per cent pay cut, up from 10 per cent, while vice-presidents and divisional vice-presidents will have a 15 per cent cut, up from 12 per cent.

Senior vice-presidents will see a 25 per cent decrease, up from 20 per cent, and executive vice-presidents will get a 30 per cent cut, up from 25 per cent.

This comes as the recovery trajectory in international air travel is weaker than initially expected, said Mr Goh, whose salary will be slashed by 35 per cent, up from 30 per cent.

"The number of (coronavirus) infections continues to rise globally, with some regions battling a second or third wave. Borders are likely to open only very slowly in the absence of a vaccine or an effective treatment."

The company will offer a Covid-19 special early retirement scheme to all ground staff and pilots next week. This will be available to those aged 50 and above, with at least 15 years of service, and up to the level of divisional vice-president.

 
 

Applications for early retirement will be subject to approval based on organisational and operational requirements. More details will be provided by the human resources division.

Mr Goh also told staff to brace for additional staff measures, given the slower growth trajectory and depressed market conditions.

"We will be engaging our staff unions on this and will announce the measures when they have been firmed up," he added.

"Our immediate priority is to do everything we can to survive this crisis and be ready for the long trudge ahead of us."

The SIA group announced a net loss of $1.12 billion for the first quarter ended June 30, as demand for international air travel and the group's airlines plummeted amid travel restrictions caused by the Covid-19 pandemic.

In his memo to staff, seen by The Straits Times, Mr Goh shared that industry experts, including the International Air Transport Association (IATA) and International Civil Aviation Organisation (ICAO), have revised downwards their projections for the recovery of global passenger traffic. They now forecast that it will take between two to four years for passenger traffic numbers to return to pre-pandemic levels.

Amid the ongoing border controls and travel restrictions, and without a domestic market to fall back on, the group operated only 5 per cent of its passenger capacity during the April-June 2020 quarter compared to pre-Covid-19 levels.

 
 

"The load factor for that skeletal network was at 10.2 per cent for the quarter, down from 83.4 per cent," said Mr Goh. "We carried a total of only 38,000 customers during those three months - a whopping 99.6 per cent drop from almost 9.4 million a year before."

He said the current view for planning purposes is that the group's passenger capacity will likely be below 50 per cent of its pre-Covid-19 levels by the end of the financial year.

Mr Goh added that the group needs to be prepared for "a long and hard Covid-19 induced winter".

Shares of Singapore Airlines (SIA) fell to their lowest in more than 21 years on Thursday. It tumbled by as much as 5.1 per cent to $3.35, the lowest intraday price since September 1998, before paring to close 3.12 per cent lower at $3.42.