SIA cuts senior management pay by 10-15%; staff offered voluntary no-pay leave

Singapore

WITH the Covid-19 outbreak hobbling travel demand, Singapore Airlines (SIA) will be cutting salaries of senior management by 10 to 15 per cent starting March 1, and offering a voluntary no-pay leave scheme to employees.

Chief executive Goh Choon Phong will lead the way with a 15 per cent cut, while the SIA board of directors will take a 15 per cent reduction in fees, The Business Times understands.

According to a note to employees on Friday and seen by BT, executive vice-presidents (VPs) will take a 12 per cent cut, and senior VPs, 10 per cent.

From April 1, divisional VPs and VPs will see a 7 per cent pay cut, while senior managers and managers will take a 5 per cent pay cut from May 1.

Meanwhile, the airline group - which also operates regional wing SilkAir and budget carrier Scoot - will be extending a voluntary no-pay leave scheme to staff, who may opt to take no-pay leave of between one week and six months this calendar year. Employees were assured that they would still have their jobs when they returned if they decided to opt in. They will also retain staff and medical benefits while on the scheme.

In recent weeks, the SIA group has cancelled thousands of flights as travel demand fell, removing 9.1 per cent in capacity from its group-wide network for the period spanning February to May.

Its management had also previously indicated to analysts that they would be looking at ways to contain costs, which could include deferring pre-delivery payments for aircraft and sourcing better payment terms from suppliers.

In Friday's note to staff, Mr Goh said: "Covid-19 has spread faster outside China with a large number of cases reported in South Korea, Iran and Italy. There are growing concerns across other parts of the world, including our major markets in Europe and the United States.

"Changi Airport recently reported that passenger movements fell by over 25 per cent during the first two weeks of February, while traffic between Singapore and China dropped by more than 85 per cent year-on-year." He added: "We will continue to be proactive in implementing measures to meet the evolving challenges. Tough decisions will be needed along the way. Management will take the lead, and all of us must be prepared to make sacrifices. Our priority is to save jobs."

SIA also said it will be engaging its staff unions to discuss additional measures.

In response to queries from BT, a spokesman for Scoot said it will be implementing similar manpower cost reduction measures to its parent SIA in reaction to the Covid-19 outbreak.

The world's airlines have been forced to slash capacity as jittery tourists eschew holidays and companies rethink corporate travel.

It was reported this week that over 25,000 staff, or 75 per cent of headcount, at Cathay Pacific - already struggling with dampened demand from protests in Hong Kong - would be taking unpaid leave.

Meanwhile, Australian flag carrier Qantas is cutting flights to Asia and hitting pause on recruitment.

According to the International Air Transport Association, Asia-Pacific carriers could stand to lose up to US$27.8 billion in lost revenue as a result of the outbreak.

Shares in SIA ended the day's trading at S$8 on Friday, down 32 cents.