SIA to outsource, divest after major restructure<\/p>\n
Agence France-Presse, Singapore<\/p>\n
Singapore Airlines (SIA) will outsource some basic services
\nand may divest key units as part of a major restructure that the
\nnation's political powerbroker, Lee Kuan Yew, has ordered,
\nreports said on Tuesday.<\/p>\n
Lee, Singapore's first prime minister who still holds the
\ninfluential position of senior minister, hauled SIA's management
\nand unions into a meeting on Monday to tell them the company must
\n"transform its business model" within the next six to 18 months,
\nthe Business Times said.<\/p>\n
"Get your act together and make SIA as cost efficient as
\npossible," Lee, 80, was quoted as saying in the meeting.<\/p>\n
Lee said SIA, one of the world's most successful airlines, had
\nto adapt to the challenges of low-cost airlines, new technologies
\nand increasing competition from carriers that outsource many
\nservices.<\/p>\n
"SIA will also have to transform its business model. This is
\nalready taking place elsewhere. Airlines are beginning to
\ndisaggregate their various components," Lee said, according to
\nthe Business Times.<\/p>\n
"In the past, it was normal for an airline to cater in-flight
\nmeals themselves, perform their own handling at the gates, etc.
\nHowever, many of these functions can now be better performed out-
\nsourced."<\/p>\n
Lee warned there could be job losses in the restructuring
\nprocess and stressed the government intended to protect Changi
\nairport over SIA.<\/p>\n
"Between preserving our assets in SIA and protecting Changi's
\nhub status, our priority must be the hub status," The Today paper
\nquoted Lee as saying.<\/p>\n
In this respect, Lee said a third license for airport ground
\nhandling and inflight catering would be issued to compete against
\nSIA's Singapore Airport Terminal Services (SATS) and Changi
\nInternational Airport Services.<\/p>\n
Another option Lee floated was for SIA to divest itself of its
\n87 percent stake in SATS.<\/p>\n
SIA also fully owns regional airline Silkair and has an 87
\npercent stake in SIA Engineer Company, although the media reports
\nsaid SATS would likely be divested ahead of the other two.<\/p>\n
SIA chief executive Chew Choon Seng, who attended the meeting,
\nemerged from the lecture non-committal about the carrier
\ndivesting SATS.<\/p>\n
"These are matters for the board of SIA to consider," he said.<\/p>\n
However Lee's influence within SIA, which the government
\nmajority owns, is legendary and his views are rarely challenged.<\/p>\n
Most recently, immigration officials last month stripped SIA
\npilot Ryan Goh, a Malaysian national, of his permanent residency
\nafter Lee singled him out for stirring union unrest over the
\nairline's cost-cutting measures.<\/p>\n
Goh lost his job as a result, with Home Affairs Minister Wong
\nKan Seng describing him as an undesirable immigrant.<\/p>\n
Singapore Airlines' share price was down 10 Singapore cents
\n(US$5.95 cents) at 11.30 at the close of Tuesday's morning
\nsession of trading.<\/p>",
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