Singapore Airlines to Cut Capacity by 11%; Decommission 17 Aircraft

The management of Singapore Airlines met with leaders of the three staff unions early on Monday to discuss the airline’s plans for mitigating the impact of the global economic downturn.

In view of falling demand, as reflected in advance bookings, Singapore Airlines has confirmed it plans to reduce capacity in the coming financial year, commencing April 2009 and ending March 2010, by 11% from the preceding twelve months.

In the course of the year, 17 aircraft will be decommissioned from the operating fleet. Before recession hit major markets, the plan was for only four aircraft to be phased out – one for conversion to a freighter, and three to be returned to lessors at completion of lease contracts.

Singapore Airlines Chief Executive Officer, Chew Choon Seng, said, “The drop in air transportation has been sharp and swift. Given the falls of over 20% 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.

“Singapore Airlines does not have a domestic operation to soften the blow from the slump in international air traffic, and we have to act decisively to address the situation. We have determined the capacity to be operated that will enable the airline to remain viable in a shrinking market, but the removal of surplus capacity will result in redundant resources and will draw sacrifices from every one of us in the company.

“We have already taken action such as expanding and stepping up training and re-training programmes, and we will contemplate retrenchment only as a last resort, but we do not have the luxury of time and we need to agree and act on some measures quickly so that we can push back the point of retrenchment as far as possible and improve our chances of avoiding it altogether.”

Apart from containing costs without compromising on safety, security and quality of service, the company is engaging the unions on measures that will affect staff. Such measures include accelerated clearance of leave entitlements, salary cuts, voluntary leave without pay, voluntary early retirement and shorter work months.

“The company will work with the staff and the unions in forging a consensus on the action plans. Together in cooperation, we will rise to the challenges confronting us and ride out the storm,” Mr. Chew said.

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