Because it is planning to ground a number of its planes next month, Singapore Airlines' management reckons that its staff may as well put their feet up on the couch for unpaid leave of up to two years. The regional carrier confirmed its latest move to reduce costs on Wednesday, March 11.

The retrenchment would allow all of its more than 14,000 employees to decide, by the end of this month, whether to apply for unpaid leave--for terms ranging from one week to two years.

The voluntary scheme was a way to manage the surplus manpower arising from its planned capacity cuts, the Straits Times reported Wednesday, quoting a spokesperson with Singapore Airlines who refused to divulge any more details on the scope of the company's labor surfeit.

In view of falling demand--a casualty of the global economic downturn--as reflected in advance bookings, the Singapore carrier announced last month plans to cut its capacity by 11%, in the coming fiscal year, which begins April 1.

During that period, 17 aircraft, out of its total fleet of 101 planes, will be decommissioned. The air carrier withdrew its service to Amritsar in India in February and will pull out of Vancouver from April onward.

Flights to Sydney, Seoul and Tokyo, as well as Beijing, Guangzhou and Nanjing in China, will also be cut back. This is the carrier's first such move since the outbreak of severe acute respiratory syndrome in 2003, which compelled it to cut capacity by up to 29%. In spite of the precaution, it then posted a quarterly loss of S$312 million.

Singapore Airlines reported last month that its third-quarter profit fell by 43% as a result of fuel-hedging losses and shrinking demand for travel and cargo. The airline carried 1.6 million passengers in January, 10.4% fewer than in January last year. Only 74% of seats were filled in January, as traffic fell by 6.9% on yearly basis.

According to a research report by Citigroup, wages constituted 17% of Singapore Airlines’ operating costs in the third quarter, making them the airlines' second-largest component expense after fuel (43%).

As was the case at the height of the SARS epidemic, Singapore Airlines has engaged staff unions to discuss measures such as accelerated leave clearance, unpaid leave, early retirement and shorter work months. Citigroup predicted, “Salary cuts have not been ruled out, but retrenchment will be a last resort.”

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