SIA to let staff take up temporary jobs outside group

FACED with a long, harsh "Covid-19 induced winter", Singapore Airlines (SIA) will press ahead with efforts to contain costs after announcing a massive cash call last week, and will allow employees to take up temporary placements outside the SIA group following major cuts to flight operations.

Late Thursday night, the airline group announced it would raise S$5.3 billion via a rights issue and a further S$3.5 billion through 10-year mandatory convertible bonds (MCB); in addition, it will be seeking shareholder approval to further issue up to another S$6.2 billion in additional MCBs to be offered to shareholders down the line.

SIA's largest shareholder Temasek Holdings is throwing its support behind the airline, underwriting both issuances. In the meantime, the group has also arranged for a S$4 billion bridging loan facility with DBS Bank to fulfill its immediate cashflow needs.

In a note to staff seen by The Business Times, chief executive Goh Choon Phong told staff that while the S$15 billion in funding has provided SIA with "a critical lifeline", the airline is not out of the woods just yet.

Around the world, airlines have had their operations paralysed by border closures, resulting in travel coming to a virtual standstill.

Singapore's flag carrier will continue to operate just 4 per cent of its original capacity for the "foreseeable future"; only 10 planes out of its 200-strong group-wide fleet will be operational. As a result, there will be a large number of surplus crew members and ground staff.

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Faced with negligible revenue while continuing to incur expenses, SIA will still face "very significant negative cash flow every month", even as the government's recently announced multi-billion-dollar support package delivers some relief.

Mr Goh said on Monday: "With no visibility on when the global outbreak will be brought under control, we must be prepared for a long and harsh Covid-19 induced winter. As a result, we must ensure that the S$15 billion is used judiciously to last for as long as possible while we await market recovery."

The airline group will thus continue to defer non-essential expenditure as well as press on with pay cuts and compulsory no-pay leave.

It has been already announced that the airline's senior management is taking salary cuts; Mr Goh himself will take a 30 per cent reduction from April.

Pilots, executives and associates will take varying days of compulsory no-pay leave, and furlough is on the cards for staff on re-employment contracts; other employees are being offered voluntary no-pay leave as an option.

SIA's human resources department will introduce measures to facilitate those members of staff who want to volunteer their time with the government's efforts to fight the Covid-19 outbreak; however, they will still be employed by SIA and retain benefits, including medical benefits.

Employees are also being given the option of temporary placements outside the group. Staff will return to the airline at the end of the deployment period, the memo said.

With staff bearing cuts to their salaries, the airline been working with the big three local banks to provide support schemes for those who need it, including support with income tax and mortgage payments.

Highlighting that the crisis has brought out the best in SIA, Mr Goh also pointed out that many pilots and members of the cabin- and ground crew have come forward to help out at the contact centre, which was struggling to cope with the surge in customers reaching out.

"This crisis has taught us many lessons, including the need to be ultra-nimble and flexible as the situation changes rapidly and abruptly. Even more importantly, it has further deepened our commitment to the SIA family and strengthened our bond with one another. I have no doubt that we will be first off the blocks when the recovery comes," he concluded.