Singapore government backs SIA staff cutbacks

Singapore government backs SIA staff cutbacks

Agence France-Presse, Singapore

Deputy Prime Minister Lee Hsien Loong on Tuesday backed
Singapore Airlines' (SIA) decision to lay off pilots and cabin
crew, saying it was necessary to keep the Singapore icon
competitive.

The carrier, nearly 57 percent owned by the government
investment arm Temasek Holdings, must restructure wages and keep
costs down while maintaining its premium service in order to
outperform competitors, he said in a speech at a conference of
the National Trades Union Congress (NTUC).

Lee, who is also finance minister, underlined the importance
of SIA to the Singapore economy and the city-state's
international reputation for quality service and efficiency.

"Whether SIA prospers affects not only SIA's workers but the
whole economy and our international reputation," he said.

The airline, which faces its first ever loss in the current
financial year, said Monday it was laying off 26 pilots and 156
cabin crew on top of the 414 retrenched last month.

SIA has been among the high-profile casualties of the plunge
in travel demand induced by the Severe Acute Respiratory Syndrome
(SARS) which peaked in East Asia in April and May before it was
contained.

At a forum after his speech, a trade union delegate asked Lee
why SIA proceeded with the retrenchments despite a pickup in
travel demand even after employees agreed to take wage cuts and
unpaid leave.

"Retrenchment is always an unhappy business... but (from) time
to time it has to be done and we just have to see how it is done
and whether it is justified and whether it is properly handled,"
Lee responded.

SIA's role is changing," he said, citing how other major
carriers like United Airlines, American Airlines, British Airways
and Australia's Qantas have slashed staff and restructured their
companies.

"If SIA does not do it, will it still be in business?"

Lee warned this may not be the last round of retrenchments
involving Singapore companies.

"If we say no to retrenchments, then we may not have
retrenchments but closures... remember Swiss Air, it was one of
the top airlines in the world but today it doesn't exist.

"If Swiss Air can run into trouble like that, SIA can also run
into trouble... I think we should make sure that we keep the
company (SIA) flying and flying high," he said.

NTUC secretary general Lim Boon Heng said the retrenchments
were part of a package of cost-cutting measures taken by SIA.

"The pay cut was not as much as the management originally
wanted, so they had to carry out some retrenchments. Fortunately
with the recovery, the number of people who were retrenched was
not as high as originally thought."

In his speech, Lee said SIA faces twin threats from other
major carriers which were forced to shape up and improve
efficiency after the Sept. 11, 2001 terrorist attacks in the
United States and SARS, as well as from the emergence of budget
airlines in Asia.

"This does not mean that SIA should drop the Singapore Girl,"
he said, referring to the globally recognized image associated
with the SIA's top-quality inflight services.

"SIA targets the higher end (of the market)... and premium
service will remain its selling point but SIA will have to cut
costs, lower prices and offer even better service in order to
outperform its competitors, or else see its business taken away."

Pilots have had their monthly salaries slashed by 16.5 percent
and first officers by 11 percent. The pilots' union also agreed
members would take up to two days of unpaid leave a month.

Other SIA staff took wage cuts of up to 11 percent.

SIA recorded historic losses during the height of SARS in
April and May as travelers shunned East Asia, which bore the
brunt of the 800 SARS deaths out of more than 8,000 infections
worldwide.