Singapore Airlines (SIA) stated on Monday (23 March) that it will slash 96 per cent of the capacity that had been scheduled. This cut in capacity will continue until the end of April.
In a news release, SIA stated that the decision was finalised after waves of increased border controls in many countries over the last week to contain the COVID-19 outbreak.
Of the total fleet of 147 planes, around 138 of SIA and SilkAir planes will be grounded. SIA’s budget unit, Scoot is going to suspend “most of its network” as it grounds 47 of its 49 planes.
This drastic cut in capacity is the company’s “greatest challenge that the SIA Group has faced in its existence”, the airline remarked.
The airline further added that “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 resultant collapse in the demand for air travel has led to a significant decline in SIA’s passenger revenues.”
To settle immediate cash flow requirements, the SIA Group has drawn on its lines of credits over the previous few days and it is also negotiating with several financial institutions regarding its future funding requirement. “The company is actively taking steps to build up its liquidity, and to reduce capital expenditure and operating costs,” said the airline.
According to SIA, it is discussing with aircraft makers to delay upcoming deliveries, so that payment can also be delayed for those deliveries.
In February, board directors’ fees and management salaries were slashed, alongside the introduction of voluntary no-pay leave scheme for workers up to certain management positions, SIA noted.
“Given the worsening situation, the unions have been engaged on the additional cost-cutting measures that are needed and more steps will be taken imminently…The company continues to explore measures to shore up its liquidity during this unprecedented disruption to global air travel.”
Goh Choon Phong, the CEO of SIA Group, has taken a 15 per cent cut in salary, and he hinted that the company is facing an “extremely challenging time”.
“We continue to focus on getting as many of our passengers as possible back home safely and protecting the jobs of our people,” he added.
Furthermore, the handling capacity at SIA’s sales offices and service centres have “more than doubled” so that customers can be attended to, he concluded.