KUALA LUMPUR (March 23): Singapore Airlines Ltd (SIA) says today it will cut 96% of the capacity that has been originally scheduled up to end-April, as more countries impose strict cross-border controls to stem the coronavirus (Covid-19) outbreak.
This will result in the grounding of around 138 SIA and SilkAir aircraft, out of a total fleet of 147, it added.
"The group’s low-cost unit Scoot will also suspend most of its network, resulting in the grounding of 47 of its fleet of 49 aircraft," SIA said in a statement.
Without a domestic segment, SIA said its group of airlines has become more vulnerable when international markets increasingly restrict the free movement of people or ban air travel altogether.
"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."
SIA also said it is actively taking steps to build up its liquidity, and to reduce capital expenditure and operating costs.
Some of the measures it has taken include deferring upcoming aircraft deliveries, salary cuts for SIA Group’s management with its directors also agreeing to a cut in their fees, and a voluntary no-pay leave scheme up to certain management positions.
"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.
"Over the last few days, SIA Group has also drawn on its lines of credits to meet its immediate cash flow requirements. The group is engaging in discussions with several financial institutions for its future funding requirements," it added.
Last night, Emirates announced that it will temporarily suspend all its passenger operations from Wednesday (March 25) amid travel bans around the world. However, it reportedly reversed its decision shortly after, saying it had "received requests from governments and customers to support the repatriation of travellers" and will continue to operate passenger flights to 13 destinations, down from its usual 159.
At 9.31am, SIA shares were down 7.97% at S$5.54, bringing a market capitalisation of S$7.13 billion.