BC Tam 2 Report post Posted February 16, 2009 (edited) Singapore Airlines to Cut Capacity by 11%; Decommission 17 Aircraft Monday, 16 February 2009 The management of Singapore Airlines met with leaders of the three staff unions early on Monday to discuss the airline’s plans for mitigating the impact of the global economic downturn. In view of falling demand, as reflected in advance bookings, Singapore Airlines has confirmed it plans to reduce capacity in the coming financial year, commencing April 2009 and ending March 2010, by 11% from the preceding twelve months. In the course of the year, 17 aircraft will be decommissioned from the operating fleet. Before recession hit major markets, the plan was for only four aircraft to be phased out – one for conversion to a freighter, and three to be returned to lessors at completion of lease contracts. Singapore Airlines Chief Executive Officer, Chew Choon Seng, said, “The drop in air transportation has been sharp and swift. Given the falls of over 20% 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 the business, we have to face the reality that 2009 is going to be a very difficult year. “Singapore Airlines does not have a domestic operation to soften the blow from the slump in international air traffic, and we have to act decisively to address the situation. 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. “We have already taken action such as expanding and stepping up training and re-training programmes, and 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.” Apart from containing costs without compromising on safety, security and quality of service, the company is engaging the unions on measures that will affect staff. Such measures include accelerated clearance of leave entitlements, salary cuts, voluntary leave without pay, voluntary early retirement and shorter work months. “The company will work with the staff and the unions in forging a consensus on the action plans. Together in cooperation, we will rise to the challenges confronting us and ride out the storm,” Mr. Chew said. from here Could this accelerate retirement of SQ's 774's (not counting the freighters) ? Also, is the capacity shrink only within SQ or it involves MI too ? Edited February 16, 2009 by BC Tam Share this post Link to post Share on other sites
Cingji 0 Report post Posted February 16, 2009 (edited) SINGAPORE -- Singapore Airlines Ltd. said it will further cut capacity and is in talks with its staff and unions for early retirements and other cost-cutting measures as the global recession crimps demand for travel. "In view of falling demand, as reflected in advance bookings, Singapore Airlines plans to cut capacity in the [fiscal year starting April 2009], by 11% from the preceding 12 months," the airline said in a statement. The latest reduction is in addition to a 3% cut in total flights the airline announced last month. Singapore Airlines then said that it was cutting 214 flights to destinations in China, India, Australia, the U.K. and Switzerland. Over the weekend it said it was suspending its three-times a week service to Vancouver. The carrier didn't say how many flights would be suspended with the latest capacity cut. Singapore Airlines has been steadily reducing its flights since late last year to many regions as the global slowdown reduces demand for business and leisure travel. The airline, described by analysts for years as the best-run and most profitable in the world, has also been hit by a double-digit fall in cargo volume as Asian exports to Western countries have been falling. "The drop in air transportation has been sharp and swift. Given the falls of over 20% that we have seen recently in cargo shipments, and demand for air travel following closely behind trends on the cargo side of the business, we have to face the reality that 2009 is going to be a very difficult year," Singapore Airlines Chief Executive Chew Choon Seng said in the statement. Major Asian carriers make around 40% of their revenue from cargo. "We have already taken action, such as expanding and stepping up training and retraining programs, and 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," Mr. Chew said. Singapore Airlines said it is discussing with unions shorter work months and unpaid leave, as well as early retirement. "If there are to be cuts in salary, the management will be the first to take them," the airline said. Singapore Airlines, which is 54%-owned by Singapore's state-owned investment company Temasek Holdings Pte. Ltd., said it will decommission 17 aircraft from its fleet of 102 aircraft during the year. "Before recession hit major markets, the plan was for only four aircraft to be phased out -- one for conversion to a freighter, and three to be returned to lessors at completion of lease contracts," the airline said. Singapore Airlines has also been hit hard by oil-hedging losses as jet fuel prices have fallen to less than half from levels in mid-2008. The company said last week that it booked a 341 million Singapore dollar (US$226.2 million) hedging loss in the third quarter. For the fourth quarter ending March 2009, it has hedged 44% of its fuel requirements at US$131 a barrel. Jet fuel is currently trading around US$53.50 a barrel. Edited February 16, 2009 by Cingji Share this post Link to post Share on other sites
Denny Yen 0 Report post Posted February 16, 2009 SQ will cancel its SIN-ICN-YVR route effective 4/28. This marks the end of SQ's service in Canada (having served it for >20 years). Share this post Link to post Share on other sites
Hon Lin 0 Report post Posted February 16, 2009 i am genuinely quite surprised to see this... even the top dog of the airline industry is starting to feel the pinch..let alone other weaker ones i wonder how is mas going to cope with it... Share this post Link to post Share on other sites
Isaac 0 Report post Posted February 16, 2009 The latest reduction is in addition to a 3% cut in total flights the airline announced last month. Singapore Airlines then said that it was cutting 214 flights to destinations in China, India, Australia, the U.K. and Switzerland. Over the weekend it said it was suspending its three-times a week service to Vancouver. UK ? Are they cutting down flights to LHR ? Or just MAN ? Share this post Link to post Share on other sites
Sandeep G 1 Report post Posted February 16, 2009 The 17 aircraft seeing faster retirement will most likely be some of the older 777s.. SQ* and SR* series - in tandem with the delivery of A330's into the fleet. Note also, the article does not state that in addition to aircraft leaving the fleet, there will be aircraft entering the fleet. The problem SQ is unfortunately facing I feel is difficulty in filling the premium cabins which are a major source of revenue for the airline - and this is in tandem with global economic distress amongst large multinational companies and large corporations whom have cut staff travel (usually in premium cabins).. We wait to hear what is the outcome, but the hedge at US$131 is tremondously unfortunate if jet fuel prices stay at present market levels... Share this post Link to post Share on other sites
BC Tam 2 Report post Posted February 16, 2009 ..... but the hedge at US$131 is tremondously unfortunate if jet fuel prices stay at present market levels... From a largely selfish perspective, it's unfortunate only for SQ and others who have hedged and need to buy fuel, whilst joe bloke like yours truly can only be grateful it has crashed from those silly prices Share this post Link to post Share on other sites
Pieter C. 5 Report post Posted February 16, 2009 Singapore Airlines then said that it was cutting 214 flights to destinations in China, India, Australia, the U.K. and Switzerland. Not surprised here: 2 SQ flights a day to ZRH is a bit "overdone" IMHO... Guess SQ0342 will be the victim... Share this post Link to post Share on other sites
Robert 0 Report post Posted February 16, 2009 UK ? Are they cutting down flights to LHR ? Or just MAN ? Yes they are. The 744 flight no doesnt run on every day. This was announced a month or so ago. Share this post Link to post Share on other sites
S V Choong 4 Report post Posted February 16, 2009 * To cut capacity by 11 pct * In talks with unions to try and avoid layoffs * CEO says co faces "very difficult" year * Stock closes down 1.5 pct, slightly underperforming bourse (Adds analyst comments, January load factor) By Harry Suhartono SINGAPORE, Feb 16 (Reuters) - Singapore Airlines (SIAL.SI) plans to cut its capacity by 11 percent in the year from April as travel and cargo demand wanes, and has begun talks with trade unions in an effort to avoid layoffs. The world's biggest airline by market value said on Monday it only filled 63 percent of the space available on its planes for passengers and cargo in January, down from 68 percent a year ago, as global airlines suffer from the financial crisis. "Going forward, even Singapore Airlines, the most profitable airline, is not immune to the global slowdown," Daphne Roth, head of Asian equity research at ABN Private Banking, told Reuters. "I think it is the right direction but it would not help to avoid a drop in profit," she added. Monday's announcement came after the company posted a 43 percent drop in quarterly profit last week, hurt by hedging losses and slowing demand for travel and cargo. [iD:nSIN31660] It said 17 aircraft will be decommissioned from the operating fleet, up from its previous plan of phasing out four planes before recession hit major markets. "The drop in air transportation has been sharp and swift... We have to face the reality that 2009 is going to be a very difficult year," Chief Executive Officer Chew Choon Seng said in the statement. Singapore Air, 55 percent-owned by state investor Temasek Holdings [TEM.UL], had previously said it may continue to scale back flights and reduce capacity. On Saturday the company, which has a market value of $8.3 billion, said it would indefinitely suspend its flights between Singapore and Vancouver via Seoul from April 25. The company has seen declining passenger demand and had already cut flights to various Asian cities. [iD:nSIN322047]. On Monday, its shares closed 1.5 percent down, slightly underperforming a Singapore market .FTSTI 1.3 percent weaker. UNION TALKS Singapore Airlines said it had met leaders of the three staff unions on Monday and discussed the company's plans for mitigating the impact of the global economic downturn. Chew said the company "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," he said. Hundreds of thousands of industry jobs will be at risk as global passenger traffic will fall 3 percent this year and airline losses will total $2.5 billion, the International Air Transport Association (IATA) said in December. Passenger traffic at Singapore's Changi Airport, a regional flight hub, is expected to fall by 8.5 percent and cargo traffic by 5.1 percent in 2009, a cabinet minister said last week. (Editing by Simon Jessop) http://www.reuters.com/article/rbssIndustr...0090216?sp=true Share this post Link to post Share on other sites
S V Choong 4 Report post Posted February 16, 2009 (edited) Singapore Air to Decommission Planes as Travel Drops (Update3) Feb. 16 (Bloomberg) -- Singapore Airlines Ltd., Asia’s most profitable carrier, will slash seat capacity 11 percent as the global recession hammers demand for air travel. The airline will take 17 passenger planes out of its fleet in the fiscal year beginning April, it said in a statement to the Singapore stock exchange today. The carrier had earlier planned to remove four planes from its fleet of 102 aircraft before the recession deepened. Chief Executive Officer Chew Choon Seng has slashed flights and lowered surcharges to survive a global economic slowdown that has already pushed British Airways Plc, Korean Air Lines Co. and Japan Airlines Corp. to losses. Singapore Air, which last week reported its biggest drop in quarterly profit in at least five years, may need to accelerate capacity-reductions as cuts in travel budgets and job losses sap demand. “The industry is saddled with overcapacity and we’re going to see serious cutbacks in capacity over the next two years,” said Jim Eckes, managing director of industry adviser Indoswiss Aviation. “There’s no good news right now.” Asia-Pacific passenger traffic sank 9.7 percent in December, while freight volumes tumbled 26 percent, the International Air Transport Association said on Jan. 29. The traffic declines for both passengers and freight were the biggest of any region, the trade group added. “The drop in air transportation has been sharp and swift,” Chew said in the statement today. “We have to face the reality that 2009 is going to be a very difficult year.” Qantas, Cathay Singapore Air, the world’s largest airline by market value, declined 1.5 percent to S$10.44 at the close of trading in the city today. The stock has declined 7.3 percent this year, extending last year’s 35 percent tumble. January passenger numbers dropped 10 percent to 1.446 million, the airline said today in a separate statement. The carrier filled 74.1 percent of its seats last month compared with 80.5 percent it packed a year earlier. China Eastern Airlines Corp., Qantas Airways Ltd., Cathay Pacific Airways Ltd. and other Asia-Pacific carriers have slashed capacity or grounded planes as the global slowdown saps demand. Singapore Air last grounded planes when a respiratory virus halted travel in 2003. The airline has reduced fuel surcharges thrice since September and cut back on flights to the U.S., Canada and India to reflect the lower demand for air travel. “Last Resort” The carrier hasn’t deferred deliveries of new aircraft yet, spokesman Stephen Forshaw said in a phone interview today. As at Jan. 1, the airline had 102 planes in its fleet, with another 72 on firm order or on lease, according to its Web site. Current capacity plans by Asian airlines, excluding China, point to a contraction of seats of only 1.6 percent in 2009, a Jan. 22 report by Bank of America’s Merrill Lynch said. That compares with traffic declines of 8 percent, it added. Singapore Air will consider job cuts only “as a last resort,” it said. The carrier held talks with labor unions on measures to reduce costs, including voluntary leave without pay, early retirement and shorter work months, it 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,” Chew said. To contact the reporter on this story: Chan Sue Ling in Singapore slchan@bloomberg.net Last Updated: February 16, 2009 04:36 EST http://www.bloomberg.com/apps/news?pid=206...&refer=asia Edited February 16, 2009 by S V Choong Share this post Link to post Share on other sites
KK Lee 5 Report post Posted February 17, 2009 Understand in the current round of financial crisis, most airlines lost more money in fuel hedging than from operation. Share this post Link to post Share on other sites
Mohd Suhaimi Fariz 2 Report post Posted February 17, 2009 I wonder whether MAS is experiencing the same thing. Senyap aje... Share this post Link to post Share on other sites
Azman MN 1 Report post Posted February 17, 2009 LEX column in FT commented that if SQ is feeling it... then other airlines are in BIG trouble! Anyway, today my colleague booked C class tickets on SQ for ZRH - SYD next week and he had no problems finding seats. Last year I booked this late as well for more or less the same travel dates and I was waitlisted like crazy and was stuck in SIN for 24 hours waiting for a connecting flight to SYD! Share this post Link to post Share on other sites
Azreen 0 Report post Posted February 18, 2009 Maybe, just maybe that MAS' restructuring program could help mitigate the company from the current downturn. If it does have that effect, then MAS had a stroke of luck as it undertook a resuscitation program to stay afloat while it prepared the company for a global downturn... Time will tell... Share this post Link to post Share on other sites
Nik H. 3 Report post Posted February 18, 2009 Maybe, just maybe that MAS' restructuring program could help mitigate the company from the current downturn. If it does have that effect, then MAS had a stroke of luck as it undertook a resuscitation program to stay afloat while it prepared the company for a global downturn... Time will tell... Very perceptive Azreen. But i don't think its just by pure chance and luck alone. I vividly recall how disappointed some members were with MH's conservative approach to expansion. Share this post Link to post Share on other sites
Cheng Kit 0 Report post Posted February 18, 2009 SIA unveils Capacity Cuts Details Singapore Airlines today outlined its planned 11% capacity cut for the 2009 Summer season Note the routes marked with ** represents this has not yet been updated in GDS Singapore - Ahmedabad Frequency is to be kept at 2 weekly (Day 26), a reduction from 3 compared to Summer 08 Singapore - Amritsar Service suspended since 01FEB09 Singapore - Bangkok** Overall frequency reduced from 41 to 33 weekly (including the SIN - BKK - NRT; see below), SQ980/981 cancelled (not updated in GDS) Singapore - Bangkok - Tokyo Reduction from 6 weekly (Day x4) to 5 weekly (Day x24) eff 05MAY09 Singapore - Beijing** Overall frequency reduce from 21 to 17 weekly. SQ810/801 reduce from 7 to 4 weekly Singapore - Brisbane** Overall frequency reduced from 19 to 14 weekly from 29MAR09 to 23JUN09, SQ255/256 suspended Singapore - Colombo** Reduction from Daily to 5 weekly from 29MAR09 Singapore - Delhi Overall frequency reduce from 14 to 11 weekly eff 29MAR09 SQ406/405, reduced from Daily to 4 weekly (Day x135), 777-200 SQ408/407, 77W Daily Singapore - Fukuoka** Reduction from 5 weekly (Day x15) to 4 weekly from 29MAR09 to 28JUN09 Singapore - Guangzhou** Reduction from 7 to 5 weekly Singapore - Hong Kong Overall frequency reduced from 6 to 5 Daily (includes 1 Daily SIN - HKG - SFO), SQ868/873 cancelled but not updated in GDS SQ862/861, availability display shows 777-300ER, but SIA inventory shows 777-200 SQ860/863, availability shows 777-200 replace -300 from 18MAY09 Singapore - Jakarta** Reduction from 8 to 7 Daily, SQ954/955 cancelled Singapore - London SQ308/319, 777-300ER replace 747-400 from 29MAR09 The overall capacity is reduced by 7.5% per day Singapore - Los Angeles** Service kept at 5 weekly (assuming Day x23) compared to Daily in Summer 08 Singapore - Male** Reduction from Daily to 5 weekly from 04MAY09 Singapore - Manchester Reduce from 5 (Day x13) to 3 weekly (Day 256) from 29MAR09 Singapore - Mumbai Overall frequency reduce from 14 to 11 weekly from 29MAR09 SQ422/421 reduce from Daily to 4 weekly (Day x246), 777-200 (-300 from 01JUN09) SQ424/423 77W Day x7 / 773 Day 7 Singapore - Nagoya** Service reduce from Daily to 5 weekly from 29MAR09 to 31MAY09 Singapore - Nanjing** Service kept at 2 weekly, a reduction from 3 compared to Summer 08 Singapore - Newark** Service kept at 5 weekly (assuming Day x23) compared to Daily in Summer 08 Singapore - Perth** Overall frequency reduced from 19 to 14 weekly from 29MAR09 to 24JUN09. Overall frequency reduced from 19 to 17 weekly from 03AUG09 and onwards SQ225/224 cancelled on above mentioned dates, but will be operating at full 5 weekly between 25JUN09 to 02AUG09 Singapore - Rome Reduce from 3 (Day 257) to 2 weekly (Day 57) from 05APR09 to 21JUN09. However, SIA press release shows reduction begins 29MAR09 Singapore - Seoul** Overall frequency (includes SIN - ICN - YVR and SIN - ICN - SFO; see below) reduced from 17 weekly to 14 weekly* * Due to SQ608/609, the 3 weekly flight planned to resume from 03JUN09, will not be operated Singapore - Seoul - Vancouver Suspended from 25APR09 Singapore - Shamshabad Frequency to be kept at 3 weekly (Day x124), a reduction from 4 weekly compared to Summer 08 Singapore - Sydney** Frequency remains at 3 Daily flight until 21JUN09, SQ233/234 cancelled First update - 1913PST 17FEB09 Second update - 2123PST 17FEB09 Share this post Link to post Share on other sites
Cheng Kit 0 Report post Posted February 18, 2009 It will also ground 17 planes such as the 747s and the older 777s Share this post Link to post Share on other sites
Hon Kit 3 Report post Posted February 18, 2009 Wow. So many flights. Wonder what are they gonna do with those grounded planes? Sit at parking lot? Share this post Link to post Share on other sites
Tamizi Hj Tamby 1 Report post Posted February 18, 2009 What a suprise Any idea about the decommisionned aircrafts (744 & 772ERs)? Share this post Link to post Share on other sites
BC Tam 2 Report post Posted February 18, 2009 Well, they've done it before And more in fact Remember those pics of the 744's grounded and half cannibalized for spares at Changi ? Share this post Link to post Share on other sites
Isaac 0 Report post Posted February 18, 2009 It's okay, they faced the worse before (2003 SARS). Share this post Link to post Share on other sites
Nick C 0 Report post Posted February 18, 2009 Wow. So many flights. Wonder what are they gonna do with those grounded planes? Sit at parking lot? All leaving the fleet. Share this post Link to post Share on other sites
Cheng Kit 0 Report post Posted February 18, 2009 It was just like MAS in 2005 when they were losing lots of money. Share this post Link to post Share on other sites
Kee Hooi Yen 0 Report post Posted February 19, 2009 Well, they've done it before And more in fact Remember those pics of the 744's grounded and half cannibalized for spares at Changi ? Any picture to share ? Share this post Link to post Share on other sites
