SINGAPORE (May 19): In a bid to “improve efficiency through greater synergy”, SIA Cargo, a wholly-owned subsidiary of Singapore Airlines (SIA), will be re-integrated as the cargo division within the group in the first half of 2018.
As the cargo division, there will be no change to its operations from a passenger perspective, and it will continue to manage the passenger aircraft ‘bellyhold’ space for SIA, SilkAir and Scoot.
A majority of SIA Cargo’s nearly-900 employees will be retained in the new division, while some will be transferred to other divisions within SIA. For those whose alternative job positions have yet to be confirmed, placement opportunities will be facilitated elsewhere within the group, says SIA.
The move comes after SIA announced on Thursday that it sank into 4QFY17 losses of S$138.3 million, due largely to a S$132 million provision for SIA Cargo for competition-related matters.
SIA Cargo was a division of SIA until July 1, 2001, when it became a separate company within the SIA Group.
At the time, it was in the process of growing its fleet up to 17 747-400Fs, and it was better-suited to carry out its expansion as a standalone all-cargo airline, recaps SIA in a Friday premarket filing to the SGX.
According to the group, the airfreight market has since seen structural change — and SIA Cargo’s freighter fleet has been ‘right-sized’ in recent years to the current seven aircraft, while the proportion of revenue from passenger aircraft ‘bellyhold’ capacity has increased significantly. Despite the smaller freighter fleet, SIA Cargo’s overall capacity still grew 4%-5% in each of the past two financial years.
In its statement, the group says it believes the reintegration will provide new opportunities for staff development within the larger SIA organisation.
“Re-integrating SIA Cargo as a division within Singapore Airlines makes sense from a business standpoint. It will improve efficiency and offer greater flexibility for staff deployment by maximising synergies with the larger SIA business,” says SIA CEO, Goh Choon Phong.
“Importantly, the cargo division will continue to provide high-quality products and services that customers have come to expect from SIA Cargo. Cargo remains an important part of our business, and we remain committed to operating a fleet of dedicated freighter aircraft to carry specialised cargo and provide feed to the overall SIA Group network.”
The integration is not expected to have a material impact on SIA’s financial performance in the 2017/18 financial year.