Singapore Airlines to cut 17 percent of fleet

Singapore Airlines said Monday it will cut 17 percent of its operating fleet and is exploring other cost-saving measures amid a global economic slump which has hit travel and cargo demand.

The airline, one of Asia's major carriers, said in a statement that it will decommission 17 passenger aircraft over the financial year from April 2009 to March 2010, instead of just four as originally planned before the global downturn hit major markets.

An airline spokesman said Singapore Airlines (SIA) had 102 passenger aircraft as of February 1.

"The drop in air transportation has been sharp and swift," SIA chief executive Chew Choon Seng said in the statement.

"Given the falls of over 20 percent 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 business, we have to face the reality that 2009 is going to be a very difficult year."

SIA said it made the decision in view of falling demand which is reflected in advance bookings. The cuts will translate into an 11 percent reduction in capacity from the preceding 12 months, it said.

"It's going to get worse," said Shukor Yusof, an aviation analyst with Standard and Poor's. "It is likely that layoffs will come next."

Chew said job cuts would be only a last resort, but the airline management had met with the leaders of its labour unions about plans to cushion the impact of the downturn.

This includes asking staff for voluntary unpaid leave, early retirement, shorter work months and accelerated clearance of leaves.

"If there are to be cuts in salary, the management will be the first to take them," Chew said.

SIA said recently it will push through with all its current orders, including 13 Airbus A380 superjumbos -- the world's largest passenger plane -- 18 A330s and 20 Boeing B787-9 "Dreamliners", so that it can retire older aircraft.

After the latest announcement there was no immediate word from the airline -- the first to fly the A380 -- on whether those plans remain.

SIA's latest announcement came just two days after it said it will indefinitely suspend its thrice-weekly service from Singapore to Vancouver from April 25 due to poor passenger demand.

Chew said that unlike airlines of bigger countries, SIA does not have a domestic operation to soften the impact of the slump in international traffic, so the management must act decisively.

"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," he said.

"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."

SIA reported a 42.8 percent fall in net profit in the third quarter to December from the year before as it carried fewer passengers and cargo. It also forecast a bleak outlook for this year.

The airline announced late last month the suspension of some international flights to India, Southeast Asia, the United States and Europe. It also said it was reducing an all-business-class service to New York and Los Angeles.

"Compared with Cathay Pacific Airways or Qantas, SIA's latest results looked strong but the airline is flying into very turbulent, treacherous weather. And its profits are going to fall substantially," Yusof said.
source:google.com