Coronavirus: SIA announces deeper pay cuts, compulsory no-pay leave as it cuts 96% of capacity, grounds 138 of 147 planes

Singapore Airlines said that it is actively taking steps to build up its liquidity, and to reduce capital expenditure and operating costs.
Singapore Airlines said that it is actively taking steps to build up its liquidity, and to reduce capital expenditure and operating costs.PHOTO: ST FILE

SINGAPORE - Singapore Airlines (SIA) has announced deeper pay cuts for management staff and compulsory no-pay leave for other employees including captains who will have to take a week off every month. 

For now, there are no plans for retrenchments, The Straits Times understands.

Hours after SIA announced on Monday that it was cutting 96 per cent of its scheduled capacity till end-April and grounding  138 out of 147 SIA and SilkAir aircraft, chief executive Goh Choon Phong issued a  staff circular on the latest cost-cutting moves. 

In the note seen by ST, he said that 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.

Pay cuts for other affected senior staff will range from 10 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 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.

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

SIA said its  low-cost unit Scoot will also suspend most of its network, resulting in the grounding of 47 of its fleet of 49 aircraft.

In a release on Monday morning, SIA said that it is more vulnerable to international markets restricting the free movement of people or banning 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," it said. "The resultant collapse in the demand for air travel has led to a significant decline in SIA's passenger revenues."

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

The Centre for Asia Pacific Aviation has estimated that about half of all global airlines could disappear before the year end as casualties of Covid-19. 

Many countries across the world have imposed increasingly tight border controls either on its own citizens or on foreigners visiting the country to contain the virus. Australia, for instance, said last Thursday that it is closing its borders to all visitors indefinitely.

The United States has also closed its borders with Canada and Mexico and banned inbound travellers who had been to any of more than 25 listed countries up to two weeks before their arrival. Singapore on Sunday likewise said that all short-term visitors will no longer be allowed to enter or transit through the country from 11.59pm on Monday. 

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.

The measures that it is taking include discussions with aircraft manufacturers to defer upcoming aircraft deliveries and, if agreed, it will consequently defer payment for those aircraft 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 requirements.

"The company continues to explore measures to shore up its liquidity during this unprecedented disruption to global air travel," it said, adding: "The company will release further details when such measures have been firmed up."

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.