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A Singapore Airlines plane lands on the runway at Changi Airport on March 11, 2020 (Reuters photo).
Singapore Airlines is cutting around 4,300 jobs, or 20% of its workforce, as the coronavirus outbreak devastates the aviation industry.
The cuts will be made at Singapore Airlines and its SilkAir and Scoot units. Talks are ongoing with the unions and the arrangements will be finalized as soon as possible, the airline said in a statement Thursday night.
The job losses are the first at Singapore Airlines since the Sars outbreak in 2003.
“Having to let go of our valuable and dedicated people is the most difficult and harrowing decision I have had to make in my 30 years with SIA,” said CEO Goh Choon Phong.
“The next few weeks will be some of the toughest in the history of the SIA Group.”
The decision shows that even the world’s leading airlines cannot avoid the biggest financial crisis in the history of the industry after the pandemic destroyed air travel. The International Air Transport Association does not expect passenger traffic to recover to pre-pandemic levels until 2024.
Singapore Airlines is particularly vulnerable because it does not have a domestic market to fall back on.
The airline’s shares changed little on Friday after a 1.1% loss on Thursday. They are down 45% this year.
Who Will Survive?
“When the battle against Covid-19 began, none of us could have predicted its devastating impact on the entire aviation industry,” Goh said. “Eight months later, the number of carriers that collapsed continues to rise. It is not yet clear who will ultimately survive this crisis. “
The job losses come despite the airline raising around S $ 11 billion (252 billion baht) through loans and a rights issue in June, and it received help from a government employment support program. . The Finance Ministry said it spent about S $ 15 billion in July to help city-state businesses pay staff.
Unlike many of its peers, Singapore Airlines initially managed to withstand job cuts, although some employees were reassigned to work in hospitals, social services and on Singapore’s transportation network.
Contract paused
It also imposed a hiring freeze in March and offered early retirements and voluntary layoffs that cut about 1,900 jobs. As a result, potential cuts in the group have been reduced to around 2,400, the airline said Thursday.
Singapore Airlines and SilkAir only operate at about 7% of pre-pandemic capacity, and while some routes are reopening, the level is likely to be only 11% by the end of November, he said.
The job cuts could initially save the airline $ 13 million a month through March, when the government’s employment support program is due to end, and nearly $ 20 million after, according to James Teo, an analyst at Bloomberg Intelligence in Singapore.
“I think these cuts are overdue and the delay was probably due to the time it took to finalize the voluntary departures,” Teo said.
The airline suffered a record operating loss of S $ 1 billion in the first quarter through June, and revenue per passenger kilometers fell more than 99%. The virus’s problems are compounded by losses in fuel coverage, with up to 79% of its needs set at $ 71- $ 74 a barrel for jet fuel and $ 58- $ 62 for Brent, Teo wrote early Thursday. , before the announcement of job cuts.
Global pain
Few in the aviation industry have been spared from the coronavirus, and companies such as British Airways, Lufthansa, Emirates and Qantas Airways announced thousands of layoffs and vacation programs without pay. Many more are expected in the United States after a moratorium on job cuts, a condition for a $ 50 billion government bailout, is lifted in late September.
In other parts of Asia, Cathay Pacific Airways and its Cathay Dragon unit will not apply for a Hong Kong government job support program, Andy Wong, the airline’s general manager of corporate affairs, said in a statement on Friday, confirming a report in the South. China Morning Post. That frees Cathay from the requirement to retain workers in exchange for support.
The airline should complete a strategic review of its business by the fourth quarter.
However, Cathay is requesting government support for some of its subsidiaries, including low-cost carrier Hong Kong Express, Air Hong Kong cargo unit and Cathay Pacific Catering Services, Wong said.
“We need to adapt our airlines to this new reality,” he said. “It is inevitable that we will need to adjust the size of our airlines to address the shrinking travel market.”
Since January, airlines globally have signaled that up to 400,000 people will be laid off or suspended, according to data compiled by Bloomberg. In North America alone, some 130,000 job losses are expected. United Airlines said last week it will cut 16,370 jobs in October as it reduces operations, adding to the 19,000 staff cuts projected by American Airlines.
Singapore Airlines is reviewing the size and network of its fleet. In July, it agreed with Airbus to postpone deliveries of some planes and reschedule some payments, while having similar talks with Boeing.
