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Singapore Airlines: Slashes capacity by 96%, grounds all but 9 aircraft

Singapore Airlines: Slashes capacity by 96%, grounds all but 9 aircraft

Introduction

Before today’s announcement, Singapore Airlines was looking at reducing capacity by about 50%. That sounds very comfortable and relaxed in the light of the barely suppressed panic of their announcement today.

Capacity cut, aircraft grounding

Singapore Airlines will cut 96% of the capacity that had been originally scheduled until the end of April. This is the result of even more countries closing borders as a result of the COVID=19 crisis.

Including SilkAir, Singapore airlines will ground 138 aircraft, out of a total of 147. Scoot, their low-cost offshoot will ground 47 out of 49 aircraft.

Given that no-one is flying, these further reductions seem only sensible.

You will find a full list of cancelled flights on this page. They could have made life a little easier if they just listed what routes they are still flying! Still, I suppose it provides positive information about that flight you wanted to check was cancelled!

Financial pain

Like the rest of the industry, the loss of demand caused by the COVID-19 crisis is causing financial problems for Singapore Airlines, so they are taking some other action as well as the fleet grounding in line with falling demand. Singapore Airlines will reduce capital expenditure and operating costs through:

  • discussions with manufacturers to defer aircraft deliveries and consequent payments.
  • Management and director salary and fee cuts
  • A voluntary no-pay leave scheme for certain management positions.
  • Unions have been approached about additional cost-cutting measures. Expect an imminent announcement
  • A drawdown of lines of credits to meet cash flow requirements.
  • Discussions with several financial institutions about future funding requirements.

More to announce soon

From the statement, Singapore Airlines are clearly worried about their financial situation – which might mean their financial survival. It sounds like they are getting on top of this, and will have more to announce once discussions are complete.

2PAXfly Takeout

Singapore Airlines did well last year in terms of passenger load factor (83%), and it even had its highest revenue. But what ate into the success was increased fuel costs. The combination of these fuel cost rises, 787 engine problems, suspension of its 737 Max fleet, and extra funds raising for aircraft purchase saw the profit down nearly by half compared to the year before.

So the airline was in relatively good financial health until the current crisis. Let’s just hope they are being prudent, rather than desperate on the finance front.

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