Singapore Airlines (SIA1) (SINGY) (SIA) announced that it would cut up to 96% of its capacity until the end of April 2020 due to the breakout of COVID-19 and the subsequent travel restrictions imposed by governments worldwide.
The Singapore Changi Airport (SIN) company group, which also includes SilkAir and the low-cost carrier Scoot, will only operate 11 aircraft out of 194 total in its fleet, with Singapore Airlines (SIA1) (SINGY) and SilkAir operating nine out of 147 combined, while Scoot will operate two out of 47 jets.
While the measures to soften the impact of the outbreak were to diversify Singapore Airlines’ (SIA1) (SINGY) network, including setting up Scoot on some of the routes to appeal to a wider range of market segments, the fact that the airline group has no domestic network proves it difficult to navigate travel restrictions in international markets.
“The resultant collapse in the demand for air travel has led to a significant decline in SIA’s passenger revenues,” highlighted the company. It added further that it is still unclear when the airline can resume normal services due to the uncertainty of the current situation, including the lifting of travel restrictions around the world.
Singapore Airlines (SIA1) (SINGY) is also on a cost-cutting quest to improve the company’s financial liquidity.
The carrier is in active discussions with aircraft manufacturers to defer the deliveries of their products, which would allow deferring payments on those aircraft. Currently, the company has 150 jets in order books of Airbus and Boeing, ranging from the Airbus A320neo, Boeing 737 MAX to the Airbus A350 and the Boeing 777X.
In addition, the group’s management and company’s directors agreed to take a pay cut, with a voluntary unpaid leave scheme in place offered to management. Singapore Airlines (SIA1) (SINGY) is also in contact with its unions to discuss additional “cost-cutting measures that are needed.”
SIA is also engaged in discussions with several financial institutions to ensure its financial liquidity going into the future.