Airline facing "very difficult year"
Singapore Airlines (SIA) today (February 16) announced an 11% cut in capacity for the coming year.
It said the cuts would start form April and 17 aircraft would be taken out of commission compared with 2008.
The move comes after the Far East carrier reported a 43% drop in net profits for the last three month of 2008.
SIA had originally planned to take out of four aircraft - but that decision was made before the recession began hitting its major markets.
Chew Choon Seng, SIA's ceo, said: "The drop in air transportation has been sharp and swift. Given the falls of over 20 per cent that we have seen recently in air cargo shipments, and the tradition of demand for air travel following closely behind trends on the cargo side of the business, we have to face the reality that 2009 is going to be a very difficult year."
He said the new level of capacity would enable SIA to "remain viable in a shrinking market."
But he acknowledged the cuts would mean "redundant resources."
He said the airline would consult with staff and the unions to forge "a consensus on the action plans."
But Mr Chew warned that measure had to be taken quickly and they included clearance of leave entitlements, voluntary leave without pay, voluntary early retirement and shorter work months.
But he added: "If there are to be cuts in salary, the management will be the first to take them."
The carrier last week reported a 43% drop in net profits for the last three months of 2008.
It said that its profits for the last quarter were €174m (S$337m) compared with €356m (S$690m) for the same period on 2007.
It said its revenue for the three months dropped by 2.6% to €2,138m (S$4,154m) because of weaker passenger and cargo demand.
Group spending rose by 5.7% to €1,964m (S$£,807m) despite a drop in the price of fuel.
SIA said changes in foreign exchange rates, notably the fall on value of the UK pound, Australian dollar and the Euro against the Singaporean dollar, lowered its operating profit by €74m (S$144m).
The airline said its operating profit for the three months was €184m (S$357m), a drop of 47% on the figure of €348m (S$675m) for the same period on 2007.
The Group said it carried 4.8m passengers in the quarter, a drop of 4.2% on the figure for 2007, despite a 2.3% rise in capacity.
www.singaporeair.com