Despite Massive Losses, SIA Has No Plans to Lay Off More Employees Yet

2020 was not a good year for SIA.

All trainee pilots and cabin crew were let go, along with 2,400 other staff members. Pilots who stayed took a huge pay cut to their salary and allowance. And they even lost S$3.5 Billion in the first half of the year.

Now that a financial year has passed, it’s time to go back to the drawing tables and reevaluate their expenditure.

Luckily, this time nobody will lose their jobs.

Singapore Airlines (SIA) Group

Before we move forward, allow us to clarify what the Singapore Airlines (SIA) Group is.

The Singapore Airlines (SIA) Group includes Singapore Airlines, SilkAir and Scoot. They also own SIA Engineering Company.

From this point forward, the Singapore Airlines (SIA) Group will be referred to the SIA Group for easier reading.

Despite Massive Losses, SIA Has No Plans to Lay Off More Employees Yet

By July 2021, SIA Group aimed to operate at one-third of its pre-Covid-19.

In a virtual conference on 20 May, CEO Goh Choon Phong said the company made a loss of S$4.3 billion in the last financial year.

Their passenger carriage fell 98%, with passenger-flown revenue decreased more than S$12 billion or about 95% to S$684.7 million.

Cargo now accounts for 71% of the group’s revenue.

In April 2021, SIA’s capacity was slashed to 24%. Despite the uncertain circumstances and the new measures, they projected the capacity to grow steadily to 32% by July.

They have a plan, and since cargo accounts for a large part of the group’s revenue, they’ll start there.

SIA Group has been rebuilding its capacity since 2020, and has been looking for opportunities to expand its network.

“We are fully supportive of a calibrated and safe manner to open the borders … we’ve participated in the RGL (Reciprocal Green Lanes) … and also the discussion and preparations for travel bubbles.”

Although, well, we all know the cursed travel bubbles never happened.

Nevertheless, Mr Goh added that cargo has also been a “bright spot” with strong demand expected, and this demand is expected over the next couple of months.

No More Retrenchment

People working in SIA can now breathe a sigh of relief as there is reportedly no retrenchment being planned.

This year, the monthly cash burned were reduced to between S$100 million and S$150 million a month, as compared to about S$350 million in 2020.

The cash burn should remain “reasonably stable” at current levels.

They have driven the costs down by 60% and reduced the non-fuel expenditure due to capacity cuts, cost-saving initiatives and government support schemes.

A large part as to why the cost has reduced so significantly is because of the halving the staff costs.

I mean, they did let many staff members go last year and reduced many pilots salary and allowances so…

About 20% of positions were reduced in FY2020/2021, and the pay cuts it has instituted remain.

Mr Goh said there are no more plans to lay off more employees. He described it to be a “very painful process”.

168 planes

SIA Group is now operating with 168 planes. It is retiring 5 more planes.

In the coming FY, they are expecting 24 new planes, as well as eight 737-8 MAXs.

However, the MAXs will remain grounded until regulatory approval due to the two deadly crashes involving Lion Air and Ethiopian Airlines.

They will be grounded in Singapore and many other areas.

More Debt Financing

S$6.2 billion of convertible bonds (think of bonds as a loan), underwritten by its majority shareholder Temasek Holdings, will be issued by SIA Group.

More options for further debt financing will be undertaken if necessary.

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