Singapore Airlines (SIA) plans to cut capital spending by at least 12% this year due to a slump in demand for flights caused by the coronavirus pandemic.
CFO Stephen Barnes said the precise amount of spending to be cut would be determined as a result of talks with plane manufacturers over delivery delays.
Spending is now forecast to be S$5.3bn ($3.7bn) or less by the end of the year ending March 2021, down from the S$6bn ($4.2bn) the airline outlined in November before the outbreak.
“Any agreements we may reach with Airbus and Boeing in the coming weeks and months are not reflected here,” Barnes said.
The SIA group posted net losses of S$212m ($150m) for the financial year ending March 2020, the first in its 48-year history.
A significant portion of the loss was due to “unrealised” losses in fuel hedging caused by dramatic falls in oil prices and a decline in fuel consumption.
SIA has had to pay more than the current market rate for fuel as it had locked in purchases at a previously agreed, higher rate.
The airline’s regional rivals Cathay Pacific and Qantas Airways are also looking to delay the delivery of new aircraft as they grapple with grounded fleets.
However, unlike other national carriers SIA does not have domestic flight routes, which are typically the “last to close and first to reopen” in a pandemic scenario, to keep business ticking over.
This makes the group more vulnerable than others, said SIA CEO Goh Choon Phong.
SIA has had to cut its capacity by 96% as border controls and travel restrictions have sprung up worldwide, he added.
The airline does not expect to fly at its pre-pandemic capacity for at least 12-18 months and as a result will retire its Boeing Co 777-200ERs earlier than expected.
Cost-cutting measures to conserve cash include pay cuts for management, as well as voluntary and compulsory no-pay leave schemes for all staff, said Barnes.
Singapore’s finance minister Heng Swee Keat and his Malaysian counterpart Tengku Zafrul Aziz have met to discuss how the two economies can cooperate as both ease lockdown restrictions.
“We... discussed how we can steer our economies towards recovery as we gradually reopen, and explored areas to strengthen bilateral cooperation,” said Heng.
“We also reaffirmed our longstanding and multi-faceted bilateral relationship and the need to work with each other.”
Singapore plans to further ease restrictions on 1 June, while Malaysia has begun to allow the majority of economic sectors to resume operations.
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