Airlines

Singapore Airlines cuts 96% of capacity; grounds virtually entire fleet

With increasing border closures and Singapore now shut to short-term visitors and transit passengers, SIA bites the bullet and grounds almost all its aircraft.

Some really grim news this morning, as Singapore Airlines has announced that it will be cutting 96% of its scheduled capacity till end-April 2020 and grounding 138 out of 147 aircraft. This comes after Scoot suspended most of its network until late April, grounding 47 out of 49 aircraft.

What does this mean?

Today’s announcement basically means that the SIA Group will be operating a skeleton crew for the foreseeable future, and as the company itself acknowledges, it’s unclear when normal services can be resumed.

Grounded 138 47
Active 9 2
% Grounded 94% 96%

It was only a week ago that SIA announced a 50% capacity cut until end-April, so it’s staggering to think how much has changed in such a short period of time. That’s the new normal for now though, with more and more countries closing borders by the day. It doesn’t help that Singapore itself is now closed to visitors and transit passengers, which means both point-to-point and connecting traffic is gone.

Advertising

So what now for Singapore Airlines? Ideally, you’d think they could use the time to bring forward aircraft maintenance, especially the 4-6 weeks ‘D’ checks (although there’s little point frontloading them when they’re not yet due). They might also consider accelerating the cabin retrofits for the SilkAir fleet and the Singapore Airlines A380s. However, all this burns cash- a precious commodity at the moment.

Singapore Airlines has already unveiled plans to booster its financial position by asking staff to take no-pay leave, and cutting management salaries. In addition to this, the airline will also draw on its existing credit lines for immediate cash flow requirements, and enter into discussions with Boeing and Airbus to defer upcoming aircraft deliveries.

Advertising

As far as I’m aware, these are the outstanding aircraft orders for the SIA group:

Firm Orders Delivered Remaining
B777-9 20 0 20
B787-10 44 15 29
A350-900 67 48 19
B737 MAX 8 37 6 31
A320neo 33 3 30
A321neo 16 0 16
B787-8 13 10 3
B787-9 12 10 2
Singapore Airlines SilkAir Scoot  

I have no idea how much money this represents (aircraft list prices are notoriously different from the actual transacted prices), but it’s clear that deferring some of these deliveries would help preserve vital cash, plus avoid the situation of brand new aircraft sitting around doing nothing.

Other potential ways of raising capital may include sales and leasebacks of aircraft or new bond issuances, but given the current climate it’s tricky to see who would be in the market for that sort of thing.

Conclusion

Advertising

It’s no exaggeration to say that the current Covid-19 outbreak has affected Singapore Airlines worse than 9/11 and SARS, and today’s development is going to have far reaching repercussions down its supply chain.

For the record, there’s little doubt in my mind that Singapore Airlines will survive this. It’s too much of a national icon to fail, and there’s even been speculation of a bailout in the near future.

So I wouldn’t lose too much sleep (although I imagine a lot of people at Airline House will) over things like your KrisFlyer miles or any outstanding tickets you have with the airline. It’s a hairy situation, but they’ll pull through.

8
Leave a Reply

Please Login to comment
avatar
4 Comment threads
4 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
6 Comment authors
AlianFCAaron WongheheJP Recent comment authors
  Subscribe  
Notify of
Nicholas
Guest
Nicholas

Do we know where those nine planes are flying to?

FC
Guest
FC

how to get hold of SiA? been trying to get their hotline, but its not even engaged or ringing, like it doesnt exist. need to get my flight changed to get home.

JP
Guest
JP

“Loose” too much sleep?

hehe
Guest
hehe

buy the stock!

Alian
Guest
Alian

A lot of mentions on airline sufferings …. how airports. They must be struggling too and probably just as bad

Do NOT follow this link or you will be banned from the site!
%d bloggers like this: