19 February 2009

SIA parks aircraft as recession bites

SINGAPORE - Singapore Airlines has blamed falling advance bookings for its decision to reduce capacity.

SIA will ground 17 aircraft, 13 more than previously planned.

CEO Chew Choon Seng said, "The drop in air transportation has been sharp and swift.

"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 the business, we have to face the reality that 2009 is going to be a very difficult year."

SIA was S$1.02 billion in the black through the first nine months of its financial year, a 33 percent drop from the year-ago period.

It said its lack of a domestic network left it particularly vulnerable to the slump in long-haul demand and that the "removal of surplus capacity will result in redundant resources and will draw sacrifices from every one of us in the companyÃ¢â¬~.

Some staff are expected to be asked to take leave without pay, work shorter hours, accept voluntary retirement or be redeployed.

SIA also announced that after 20 years of operation it is suspending its thrice-weekly Singapore-Incheon-Vancouver service effective April 25.

The International Air Transport Association (IATA) this week reported huge downturns in the number of passengers flying business and first class, with Asia leading the collapse.

"With job losses accelerating in January and consumer confidence falling further it looks as though even larger declines in air travel should be expected early this year," IATA's December premium travel report warned.

In more encouraging news, SIA reached a milestone this week when it flew its one millionth A380 passenger just 16 months after its inaugural A380 service to Sydney on October 25, 2007.