Singapore Airlines confirms retrenchment plans after
SARS crisis

  Agence France Presse
June 17, 2003

Singapore Airlines (SIA) confirmed Tuesday, June 17, that staff retrenchments will be unavoidable as it faces its first-ever quarterly loss following the crippling SARS epidemic.

But it dismissed as speculation a report that up to 2,500 of the SIA group's 30,000 employees could lose their jobs.

News of the apparently imminent cost-cutting exercise boosted the airline's share price, which ended 20 cents or 1.8 percent higher at S$11.10 (US$6.42).

Analysts said the savings arising from the retrenchments along with a combination of salary cuts and compulsory no-pay leave for staff announced earlier would save SIA about $200 million a year.

"We have made it clear to our staff that some degree of retrenchment cannot be avoided," an SIA spokesman said.

"In the meantime, a special early retirement package has been offered to certain staff with at least 25 years' service, if they wish to take advantage of it," the spokesman said.

However, SIA declined to provide any numbers or percentages, saying that its staff and unions will be informed first before the airline makes any information public.

The SIA group has some 30,000 employees, with 14,300 working for the airline itself. The group includes SIA Engineering and Singapore Airport Terminal Services.

If the layoffs go ahead, they will be the first retrenchments in 20 years for a prestigious airline that has prided itself on its enduring profitability.

Management had already forecast the possibility of job losses after indicating the company was facing its first-ever quarterly financial loss in the three months to June, with the even more bleak warning that an annual loss was on the cards.

The SARS crisis, which reduced visitor arrivals into Singapore by more than 70 percent at its peak, has been primarily blamed for the severe slump.

SIA lost S$204 million (US$118 million) in April, at the height of the crisis.

Singapore was declared free from Severe Acute Respiratory Syndromeinfections at the end of May, but a recovery in the city-state's badly hit economy is expected to be gradual.

SIA is locked in a dispute with its pilots over steep pay cuts demanded by management to help the airline return to profitability.

The Straits Times newspaper reported Tuesday that SIA was considering laying off up to 2,500 workers.

Ground staff would be the most heavily affected under the plan with a reduction in their numbers of between five and 10 percent, it said, quoting unidentified sources.

SIA was also looking to cut its team of 6600 cabin staff and 1800 pilots by between two and five percent, the report said.

"Such a range of cuts being considered could mean as few as 1200 or as many as 2500 employees being laid off," the Straits Times quoted its sources as saying. "The actual numbers have not been finalised but management may decide as early as this week."