SINGAPORE - Singapore Airlines (SIA) has frozen hiring and is considering other measures such as asking staff to go on voluntary no-pay leave, The Straits Times has learnt.
After three rounds of flight cuts, the airline is facing an excess manpower situation of more than 500 cabin crew members and some 50 pilots, ST understands. This has meant fewer flying hours for all.
In response to queries from ST on Tuesday (Feb 25), SIA said: “In response to Covid-19, a general recruitment freeze has been implemented for all ground positions, and non-essential duty travel has been suspended.
“We are closely monitoring the evolving situation and will be decisive in implementing any additional measures that may be needed. We will not do anything, however, that compromises the SIA Group’s long-term competitiveness.”
In a note to all SIA staff on Tuesday, SIA chief executive officer Goh Choon Phong said the coronavirus outbreak has had significant impact on air travel, especially to Asia, since it first emerged in mid-January.
It had caused a significant drop in demand, with passenger traffic and load factors rapidly declining in all markets for SIA Group, said Mr Goh.
He said the group - made up of SIA, SilkAir and budget carrier Scoot - has temporarily suspended more than 3,000 return flights from February to end-May following the outbreak, in order to mitigate the impact of the significant drop in demand. This accounts for 9.9 per cent of the group’s scheduled flights until end-May.
Said Mr Goh: “We will continue to be nimble and flexible in adjusting our capacity to match the changing demand patterns in the market.”
He added that other preventive measures to conserve cash and reduce costs have been taken.
“A general recruitment freeze has also been implemented for all ground positions, and non-essential duty travel has been suspended,” he said.
“Selected capital expenditure has been deferred, and we have tightened discretionary operating expenditure. We have also proactively reached out to our suppliers and partners to discuss additional mitigating measures during this difficult time.”
On the revenue side, Mr Goh said the group’s commercial teams are working with tourism agencies and travel partners around the world to “aggressively drive sales, and jointly promote air travel to and through Singapore”.
He also told staff that SIA is tackling the challenges posed by the coronavirus outbreak from a position of strength.
He said this is due to SIA’s Transformation Programme, a three-year turnaround plan introduced in 2017.
The plan had sought to review work processes and operations amid fierce competition that has eroded profits. Mr Goh said on Monday that the plan has strengthened SIA’s revenue generating capabilities and driven operational efficiencies.
He also thanked SIA staff for working to maintain the group’s usual high standards and ensuring the safety of all customers and other staff despite the tough challenges.
He assured staff that all necessary measures have been taken to protect them.
“This includes stepped up cleaning regimes at our premises, temperature screening, the provision of thermometers, hand sanitisers and personal protective equipment where necessary, and the deferral of large-scale company events,” he added.
Mr Goh concluded his note by acknowledging that these are difficult times for the company, but urged staff to move forward together.
“Yes, there are strong headwinds. But the Group has successfully navigated past challenges such as 9/11, Sars and the 2008 global financial crisis... I am confident that together, we can overcome (the difficult times) and emerge as an even stronger SIA,” he said.
Aviation analyst Brendan Sobie from Sobie Aviation told ST that it was inevitable that airlines such as SIA had to resort to cost-cutting measures.
He said several other international airlines have already implemented hiring freezes.
He also expects SIA and other airlines to implement unpaid leave schemes soon, given the extent of capacity cuts and that demand is likely to remain weak for some time.
“Cost cutting is an option for all airlines but it is somewhat limited as most airline costs are fixed. The capacity and cost cuts will not be enough to avoid financial losses,” he added.
“Virtually all of Asia’s main airline groups will be unprofitable the first half of this year.”