SIA Tightens Capacity Further
Neelam Mathews mathews.neelam@gmail.com
The global downturn and swine flu are hitting bottom lines as Singapore Airlines cuts back capacity across its network.
SIA's capacity will be truncated by 11%, and 16 passenger aircraft will be decommissioned from the operating fleet between April 2009 to March 2010.
In its fourth-quarter results released yesterday, the outlook for advance bookings indicates that the drop in demand for air travel is leveling out. However, the probability of a sustained recovery has been set back by uncertainties arising from the H1N1 flu outbreak.
The singapore Airlines Group turned in an operating loss of $19 million in the fourth quarter, in contrast to the $320 million operating profit in the same period last year.
During the financial year, the airline took delivery of three Airbus A380-800s, four A330-300s and five Boeing 777-300ERs, and decommissioned six 747-400s and one 777-200.
New services to Riyadh via Dubai and Kuwait via Abu Dhabi were added to the network in December 2008 and March 2009.
In response to a drop in passenger demand, SIA suspended services to Osaka via Bangkok, Los Angeles via Taipei, and Amritsar during the year. Flights to Vancouver via Seoul have also been withdrawn since April 25.
Action taken to trim excess capacity, together with a strong balance sheet, will help to sustain the company through the downturn, says a statement. "With the cooperation of the employees and the unions, several measures have been implemented to manage surplus resources," the statement adds.
Recently, SIA pilots agreed to one day's compulsory unpaid leave per month. The decision followed negotiations between the Air Line Pilots Association and SIA.
"In the near term, promotional pricing and reduced business travel will keep revenue under pressure. On the other hand, with price of jet fuel currently at less than half what it was during last year's peak - albeit still high historically - there will be relief for expenditure. The savings will be offset by progressive settlement of fuel hedges contracted at higher prices, but the consequential effect of these hedges will tail off over the next 12 months," says a statement.
The hedging losses included $76.5 million in losses resulting from the early termination of several fuel-hedging contracts before maturity date.
As of March 31, the airline's operating fleet comprised 103 passenger aircraft - 12 747-400s, 76 777s, six A380-800s, five A340-500s and four A330-300s, with an average age of six years and two months.
Photo credit: Geoff Jones
