SINGAPORE: The Singapore Airlines (SIA) Group said it has reached an agreement with its unions for a set of cost-cutting measures that will affect 10,000 members of staff, according to an internal memo seen by CNA.

The measures were announced in an internal message on Monday (Mar 23), after the airline announced the decision to cut 96 per cent of its capacity scheduled up to the end of April. Scoot will also suspend most of its network, grounding 47 out of 49 aircraft in its fleet.

Group CEO Goh Choon Phong said the cost-cutting measures include no-pay leave for all staff up to divisional vice-presidents, varying days of compulsory no-pay leave every month for pilots, executives and associates, as well as a leave of absence for staff on re-employment contracts. 

Affected staff members will be briefed and receive more details on Tuesday.

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The management team will also be taking deeper pay cuts than previously announced in February. 

Mr Goh said he would be taking a 30 per cent pay cut to his base salary with effect from Apr 1, with executive vice-presidents taking a 25 per cent pay cut, and senior vice-presidents a 20 per cent pay cut. 

The pay cuts for divisional vice-presidents and vice-presidents will increase to 12 per cent from May 1, from the 7 per cent announced in February. The 5 per cent pay cut for senior managers and managers will be brought forward to Apr 1, and increase to 10 per cent from May 1.

Board members have also decided to take a 30 per cent cut in their fees “in solidarity with the company”.

CNA has contacted SIA for more information.

“GREATEST CHALLENGE IN THE SIA GROUP’S EXISTENCE”

The cuts come a day after Singapore authorities announced that short-term visitors will not be allowed to enter or transit through the country, in the latest round of travel restrictions amid the ongoing COVID-19 outbreak.

Countries around the world have also taken similar measures to try to contain the spread of the virus.

Globally the number of scheduled flights last week was down more than 12 per cent from the year earlier, flight data provider OAG said.

In his message on Monday, Mr Goh called the COVID-19 situation “the greatest challenge in the SIA Group’s existence”.

“In an extraordinary time in history, countries around the world are closing their borders to contain the Covid-19 virus. The decision is made from a public health perspective, but it has crippled airlines globally,” he wrote.

Mr Goh added that without a domestic segment, SIA’s airlines are “completely vulnerable when all international markets either restrict the movement of people or ban air travel altogether”.

He said that the company has been working “relentlessly” to shore up SIA Group’s liquidity, and drawn on lines of credit to meet its immediate cash flow needs. 

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READ: Singapore aviation industry ‘extremely vulnerable’ to fallout from COVID-19, say experts

SIA Group also continues to be in discussions with several financial institutions for its future requirements, and is also in discussions with aircraft manufacturers to defer upcoming deliveries.

Mr Goh also thanked his colleagues for their sacrifices and expressed his appreciation towards SIA’s unions, adding that the company would continue to engage them as the COVID-19 situation unfolds.

He apologised to SIA’s customers, thanking them for their patience and understanding as the company grapples with the COVID-19 situation. 

Mr Goh said that SIA has more than doubled the handling capacity at service centres and sales offices, and is trying to help as many customers as soon as possible.

“We must all brace for even greater sacrifices going forward, given the uncertainty over how long the COVID-19 outbreak will continue to ground our business,” Mr Goh told his colleagues in his message.

“We must be ready to pounce on every opportunity at the first signs of recovery and soar once again.”

As of Monday, SIA’s share price fell 66 cents, or 10.96 per cent, to S$5.36.

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