“Even during this crisis, our customers and staff remain our top priority,” Singapore Airlines chief executive Goh Choon Phong said on Monday, as the carrier announced it would fly 96 per cent less than planned through the end of April.
The airline said it would park around 138 SIA and SilkAir aircraft out of a fleet of 147. Scoot, its low-cost unit, would suspend most of its network and ground 47 of its 49 planes. The group called it the greatest challenge it had faced in its existence.
The trigger was Singapore’s own decision to close its borders, including to transit passengers. SIA said the collapse in demand had cut sharply into passenger revenue, and that it could not say when normal service would return, given the uncertainty over when the stringent border controls would be lifted. After the cuts, the group planned to fly to only five destinations: Brunei, Guangzhou, Shanghai, Beijing and Jakarta.
Cash and costs
SIA had already drawn on its credit lines over the previous few days to cover immediate cash needs. It was also talking to several financial institutions about future funding, and to aircraft manufacturers about delaying deliveries and payments. It declined to comment on specific funding plans.
UOB Kay Hian analyst K Ajith called access to credit a positive amid the uncertainty. “It’s important to have access to liquidity, to pay leases, to pay employees and to be able to continue to function,” he said, adding that the cost of funding remained uncertain. In a report issued before the announcement, the brokerage had said SIA needed “backstop liquidity” of at least $S5 billion ($A5.9 billion) by June.
Management salaries and directors’ fees were cut. A voluntary no-pay leave scheme covered staff up to divisional vice presidents, and pilots, executives and associates faced varying days of compulsory unpaid leave. In a memo, Goh said the airline had agreed these measures with unions. About 10,000 staff would be affected, out of more than 26,500 employees in the last financial year. The airline said further steps would follow imminently.
Shares in the airline, majority owned by state investor Temasek, fell 11 per cent, in a broader market down 7.3 per cent, and closed at their lowest in 22 years.
No home market to fall back on
SIA said it had spread its risk by building out its network and setting up Scoot. But with no domestic segment, its airlines are more exposed when other countries restrict movement or ban air travel.
Cathay Pacific Airways had earlier cut passenger capacity by 96 per cent in April and May.
Goh thanked staff for their commitment and sacrifices and apologised to customers. “We continue to focus on getting as many of our passengers as possible back home safely and protecting the jobs of our people,” he said. SIA had more than doubled the handling capacity at its service centres and sales offices. A spokesperson said SIA and SilkAir would keep running selected services, to be scaled back gradually in the coming weeks, and told Scoot customers to contact the airline directly.
Sources
- Singapore Airlines grounds most of fleet | Nine.com.au
- Covid-19: Singapore Airlines cuts 96% of capacity, grounds 138 planes as countries tighten border controls
- Singapore Airlines grounds most of its aircraft
Sources
- Singapore Airlines grounds most of fleet | Nine.com.au
- Covid-19: Singapore Airlines cuts 96% of capacity, grounds 138 …
