Singapore Airlines Makes significant capacity cuts and grounds aircraft

Singapore Airlines (SIA) will be cutting 96% of the capacity that had been originally scheduled up to the end-April, given the further tightening of border controls around the world over the last week to stem the COVID-19 outbreak.

This will result in the grounding of around 138 SIA and SilkAir aircraft, out of a total fleet of 147, amid the greatest challenge that the SIA Group has faced in its existence. The Group’s low-cost unit Scoot will also suspend most of its network, resulting in the grounding of 47 of its fleet of 49 aircraft.

The SIA Group diversified its network and set up Scoot to cater to a wide range of passenger and market segments. However, without a domestic segment, the Group’s airlines become more vulnerable when international markets increasingly restrict the free movement of people or ban air travel altogether.

It is unclear when the SIA Group can begin to resume normal services, given the uncertainty as to when the stringent border controls will be lifted. The resultant collapse in the demand for air travel has led to a significant decline in SIA’s passenger revenues. The Company is actively taking steps to build up its liquidity, and to reduce capital expenditure and operating costs.

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