Published December 31, 2008

SIA may ask cargo pilots to take leave

Airline looks to cut costs, avoid layoffs amid tough business environment

By VEN SREENIVASAN

	Email this article
	Print article
	Feedback

(SINGAPORE) Faced with its toughest operating conditions in five years, especially on its cargo side, Singapore Airlines (SIA) is looking at measures to cut capacity and costs, including asking pilots to take no-pay leave.

Mr Bisignani: The 13.5% drop in international cargo in November is shocking

The airline confirmed yesterday that it was already in talks with pilots on its SIA Cargo fleet - which is operating with load factors which are below break-even levels - to take voluntary no-pay leave.

'The cargo business position is very weak at this point in time and the outlook for 2009 is not good,' said spokesman Stephen Forshaw. 'We have well-rehearsed procedures to address these kinds of slowdowns from way back during the Sars (Severe Acute Respiratory Syndrome) days.'

He added that SIA's priority now was to try all measures to manage costs and capacity, and to try to avoid retrenchments if possible.

Given the state of the global aviation industry, the challenge SIA faces is daunting.

The latest data from the International Air Transport Association (Iata) released yesterday shows November global air cargo traffic plummeting some 13.5 per cent, while passenger traffic fell 4.6 per cent year-on-year during the month.

Asia-Pacific carriers (representing 44.6 per cent of global freight) saw freight traffic fall by a whopping 16.9 per cent in November - the largest decline of any region. As freight accounts for a larger percentage of revenue for the Asia-Pacific carriers, fourth-quarter profits for the region's carriers could be badly impacted by the downturn in the global air freight market.

'The 13.5 per cent drop in international cargo is shocking,' remarked Iata director-general Giovanni Bisignani. 'As air cargo handles 35 per cent of the value of goods traded internationally, it clearly shows the rapid fall in global trade and the broadening impact of the economic slowdown. By comparison, this is the largest drop since 2001, in the aftermath of Sept 11. The industry is now shrinking, by all measures.'

SIA Cargo sank into the red to the tune of $67 million in the six months to Sept 30 compared with a $17 million profit for the same period a year earlier. The airline, which has a pool of about 300 pilots, operates a fleet of 13 B747-400 freighters, flying to 75 cities in 39 countries.

SIA is asking many of these pilots to take an unpaid 'sabbatical to pursue other interests for a while' or consider applying to work for other affiliated airlines like China-based associate Great World Airlines.

If the voluntary no-pay leave scheme does not stem the red tide, more drastic measures such as pay cuts, and ultimately retrenchments, could follow.

Meanwhile, the airline is looking to park some of its cargo carriers for a while.

The danger now is that if operating conditions for the entire industry continue to deteriorate - as they have been for the last five months - the entire fleet (which includes the passenger side) will have to face staff cost cuts.

According to Iata, Asia-Pacific carriers saw passenger traffic decline a sharp 9.7 per cent in November, following a 6.1 per cent contraction in October.

No doubt, all this is extremely discomforting for SIA's 2,000 pilots (including almost 800 expatriate pilots from 45 nations). If conditions continue to deteriorate, they face mandatory 'off-time' at first, then pay cuts. This has all the echoes of 2003, when the airline asked its pilots to take five days off per month during the Sars slowdown.

But for now, no one is mentioning the 'R' word - yet.