Singapore airlines warns of Crisis
Singapore Airlines Warns Of Crisis; To Cut Costs
By Shen Hong
Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)--Echoing the dire straits plaguing other major global airlines, Singapore Airlines (Singapore: SIAL.SI - news) Ltd. (P.SAL) Thursday warned that it's entering the most difficult period in its history.
Painting a gloomy picture for its near-term outlook, SIA said it's reviewing its operations and will implement a series of painful cost-saving measures. Although not surprised by the news, analysts say the already-battered stock may not be able to avoid further selloffs Friday.
In one of the airline's most strongly worded statements, SIA's Deputy Chairman and Chief Executive Cheong Choong Kong told the airline's staff that the current woes are just the beginning and that they must prepare for the worst.
"This is an important message and an unhappy one," Cheong said. "The pain is only just starting; nobody dares predict when or how it will end."
While high fuel costs and poor economic conditions have made life tough for SIA in the past 12 months, "the immediate future confronting commercial aviation is far more serious," Cheong said.
Air traffic, particularly to the U.S., has declined in the wake of the terrorist attacks in New York and Washington, adding that costs are rising, particularly those of fuel and insurance.
The situation will worsen if the U.S. launches military strikes which could trigger terrorist reprisals, he said.
In order to cope with the difficulties, SIA will adjust capacity to match demand and will trim budgeted growth, "even if it means lower aircraft utilization," Cheong said.
In addition, all planned expenditure, except the essential, will be deferred, slowed down or canceled, "including capital expenditures on projects dear to us," he said.
Staff recruitment will cease, except in one or two areas, he said.
"Many airlines are starting to retrench large numbers of staff. We ourselves may not be able to avoid retrenchments, but we will look at other cost-reducing measures first," he said.
While employees and unions may be called upon to make sacrifices, Cheong said that when needed, SIA's senior management will take the lead. - - 20/09/01 11-41G