insensitive to plight of downturn?
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It is odd that the Prime Minister, Labor Minister, and even the Secretary-General of the NTUC (who is a Minister without Portfolio, in the PM Office) are all with the common view that the prospect of economic recovery will not occur until – no one seems to be sure, but all seems to be of the opinion that it will turn around sometime towards – the end of 2003 or mid-2004.
These observations were expressed as early as February 2003, when the first observation was made during the Chinese New Year celebrations, and it is now mid-June, which allowed four months to pass without any Government help to the individual Singaporeans.
Despite these common held Government Ministers’ observation over the last four months, and knowing that the situation will only deteriorate and cannot improve until at the latest prospect of mid-2004; the DPM-Finance Minister can still insist on dithering to see how the situation developed before introducing any changes in Government Financial Policies to ‘activate’ the economy.
Whatever the Government has spent on, so far, are millions of dollars to promote tourist arrivals into Singapore through STPB – after the SARS incident, millions of dollars in rebate to the Landlords – is there any other policy of significance since the announcement of these two during 2003 to overcome the present economic slowdown?
These policies do not benefit the average individual Singaporeans, many of whom have seen their pay cut from 15% to 50%, with some having their income further reduced by working shorter hours based on a reduced hourly rate benefit.
Since February 2003 until mid-June 2003, I have come to know more members of my family and friends, with their salary reduced or being retrenched completely as their employer cannot sustain the business due to cash-flow problems.
The policy implemented so far have been targeted without any direct benefit to the individual Singaporean in the form of direct tax relief, or a reduction to the Worker CPF contribution, or any other measure that helps to put more money into the Workers’ pocket – which has seen pay cuts of 15% to 50%.
While the Government Ministers can boast of taking pay cuts of 10% or more, their base pay is 6 figures – (a reduction of 10% from $100,000 still leaves a lot of loose cash of $90,000 to live on); while the average pay of most Singaporean Workers are only 4 figures – (a reduction of 10% from $1,000 only leaves $900 to pay for all kinds of household expenses).
The dithering by the DPM-Finance Minister, reminds me of the same dithering approach in his leadership during the Cable Car Crisis during the 1980’s, when he “headed” a “military effort” in a “civil affair” rescue operation.
To most average humans, the question asked was why did the operation take 6 hours before the first person was brought down from the cable cars – when the accident was reported during late afternoon (around 4 or 5pm) and the first person was finally brought down around 10pm.
The other question asked was – why did a military Lieutenant Colonel head a Civil Accident Rescue that was entirely civilian in nature? There were and are other rescues headed by Civilian Police Authority with Military support, and with the Military playing a secondary role in a Civilian environment.
Was it to give a relatively inexperienced junior Colonel some glorious challenge “in a managed environment”, which after all will be supported by many other expertise from the Police and other specialist engineers?
Yet the entire operation took over 6 hours, with typical Israeli style military “dry runs” being made to ascertain, which was the best form to execute.
In most cases, the war would have been fought and lost in 4 hours.
Almost six to eight months later, to calm the continued grumblings and prepare the ground for awards to be given, a Swiss Reporter was engaged to write a glorious report of how similar the Singapore Cable Car operation was compared with any Swiss style operation.
With so many cable car operations and chair lifts to mountain ski resorts, I hardly recall any news report of similar rescue attempt that took longer then 2 hours to bring the first life out of danger in similar situation.
In this present economic scenario, the present cautious dithering, has resulted in many more businesses being folded since the first Government Ministers speeches in February.
Many more workers have their pay cut, while many others have been retrenched.
What about those other businessmen and workers, who could not cope with the stress and joined the queue for psychiatric assistance, and those others who could not overcome their suicidal influence?
Hong Kong has responded to their economic situation, Malaysia has made their announcement of economic recovery packages; George Bush has submitted his own program of tax cuts to Congress – all geared to stimulate the economy.
In Singapore, we are still watching and waiting, with the Government reluctant to give any direct benefit to the individual Singaporean pockets, as it has always been the Government Policy not to give direct handouts that will be painful to be taken back at a later date. This is surprising when the Government has so much experience in giving some and taking back a lot more. -
During late 2000, and throughout 2001 and 2002, we have often heard of Government Ministers chiding Private Businesses for being quick to retrench, instead of making some effort to retain and retrain the pool of loyal workers.
It is surprising that Singapore Airlines having made continuous profits every financial year, since its first year of operation, should now think of:-
first, cutting the pay of its workers, and
second, with the prospect of retrenchment to follow.
Singapore Airlines is a Government Linked Company, and it is setting itself up as a role model for all other employers to reduce workersÂ’ salary before retrenchment, so that retrenchment benefits will not be so painful paid out from any Corporate Treasury.
It is blatantly disgraceful that a GLC company should set a precedent for such poor management-worker relationship, when so much has been spoken about good labor relations during good and bad times, with this line being pushed by the PM, the Labor Minister, and by the Secretary-General of the NTUC.
That this policy should be considered when Singapore Airlines is suffering its second month of loss to its Balance Sheet, is shameful – when the population has to hang on for the last Four Months, while the DPM-Finance Minister dither with his economic package to help rescue businesses that are about to die, and stop the bleeding numbers going into unemployment.
Is there a double standard being practiced here - One for GLCs and another for Private Enterprises ? -
It was a sorrowful sight to see a 31 years man, controlling his voice from breaking, while being interviewed by ChannelNewsAsia about his being retrenched after giving the best of 15 over years to Singapore Airlines.
He said: "Is this all there is for the long service given - $40,000..?"
"What about the emptiness inside me ?" - long pause -
"I feel like nothing now."
What happened to the psychological preparation and support from the great Singapore Airlines - that was shown being given to the relatives of the air-crash victims.
Where was NTUC's role in this ?
Is this what being Singaporean and being a First World Citizen is all about - in which when the crunch comes, it is not about foreigners being retrenched first, before the Citizens, but retrenchment based on merit as well ? -
Come now, SIA didn't had much of a choice. It was already losing 6 million a day. If you don't retrench, eventually bankruptcy will take place and everyone would be out of a job. <--though personally i feel it's unlikely the government would allow such a thing to happen.
It is surprising that Singapore Airlines having made continuous profits every financial year, since its first year of operation, should now think of:-
Who could predict SARS? 9-11? War on Iraq? The Bali bombings?
first, cutting the pay of its workers, and
second, with the prospect of retrenchment to follow.
How much do you know of the financial workings of SIA? The losses it was experiencing wasn't slow and gradual that resulted from poor management, it was a massive loss of business with the SARS incident while it was still recovering from the 9-11, War on Iraq and Bali.
The way i see it, SIA simply didn't have any other choice but to do so.
When you are experiencing a loss of 6 million per day is there not cause for decisive actions? What if the workers protest like the pilots against wage cuts? How much more would SIA lose if they had to negotiate again?
If you are a doctor and given a patient that is bleeding excessively from a wounded limb would you have no choice but to amputate? -
The entire world is in recession, the first world countries are doing no better than us.
Is this what being Singaporean and being a First World Citizen is all about - in which when the crunch comes, it is not about foreigners being retrenched first, before the Citizens, but retrenchment based on merit as well ?
You make it sound like none of the foreigners are being retrenched. The first stage of retrenchment will always start with the lower level, more expendable workers, so as not to affect the command structure too much, too drastic a change would result in chaos and naturally, more losses. Eventually they would move on to the mid level management, the foreigners i doubt would be immune from this change.
If you are in charge of a company and you're dealing with massive losses who do you retrench first? Especially when the losses are not due to poor management? Naturally the less educated and more expandable workers. Because if there's less business you wouldn't need so much workers, and when there's less workers why would you need so much mid level managers for?
You still have to try your best to retain the top level brains in hope that they would come up with the neccessary ideas to recover.
Why should you retrench the men that might be able to turn things around? Of course you retrench according to merit, it's a contradictary argument. -
Hi Stevenson101
Great to have you back to exercise the fingers on the keyboard.
While no one could have the crystal ball to foretell the 9-11 crisis or SARS outbreak, at least the Second Iraq War was clearly on the card for more then 8 months with the building up of the Coalition Forces in the Gulf.
Where do you think the loss of $6million a day is coming from, at SIA?
The workersÂ’ wages can hardly be the main contributory factor.
Instead, I would venture to speculate that it is the large fleet of new planes that have been purchased, all being less then five years old – in keeping with SIA policy of maintaining a “Young Fleet”.
The financial cost of paying for the planes alone will be sufficient to bleed the Company - especially when more then half the fleet is sitting idle, parked on the tarmac.
In order to stop the bleeding of $6million a day, how many more lowly paid workers or Highly Paid Senior Management (Foreigners or otherwise) will need to be sacked?
Will the sacking of human beings alone be sufficient to stem this bleeding?
Let us be realistic, instead of taking out the hatchet and start breaking the rice bowls of the workers at the slightest excuse, has SIA even thought of selling off or leasing out those idle planes that are now sitting on the tarmac at Changi Airport?
Whatever happened to the much-lauded Government advice to the Business Community of retaining and retraining of the valued workers?
It would seem that it is easier to absorb the loss of workers than to suffer immediate financial loss by selling off the assets (planes) under pressure.
As the boss, it would seem that it is easier to lose the workers, than to sell of the idle valuable assets that were acquired at such high costs.
In any other country, the CitizenÂ’s right to its work place would come first; while that of the migrant worker will always be accepted as being in jeopardy in any changes that affect the economy and/or the business environment.
In SIA’s case, while I can accept your position concerning the Foreign “Brain” in Top Management to help the organization to recover, has there been some cases in which perhaps a lower paid Foreign Aircraft Engineer is retained, at the expense of a higher paid Singaporean Engineer?
The SIA Pilot Association has insisted that SIA should look into its cost cutting measures by reviewing the high numbers of Foreign Pilots that it has employed, on terms that are different from Singapore Pilots, as these Foreign Pilots are contracted by a SIA owned Company that itself is registered “Off-shore” and not subject to the influence of the SIA Pilot Association.
Even the Prime Minister has added his weight behind SIA, by stating that retrenchment should not be on whether Foreigners should be axed first in an economic downturn, but should be based on the merit or performance of the workers.
The measure of “performance” is open to many interpretations, and can open itself to the influence of management-worker politics.
It will be just too bad to those who are involved in Union Activities, when they have sacrificed their own position to represent the workers.
Amazingly, the NTUC has remained silent on these matters, when they were so vocal during the retrenchment exercises conducted at Seagate and Texas Instrument during 2000, 2001 and 2002. -
that's is the real world...haiz
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Yeah, Won't say much here. Just wanna comment that I think Singapore's unions, ESPECIALLY the NTUC, is a bloody big joke. Come on, its a frigging UNION for the WORKERS. seems to have forgotten its role altogether what with its multitude of money making corporations and its jumping into bed with the government.
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XD A guy need to look for other hobbies other than political debate ya?
Actually, i would admit i made a mistake in my earlier statements. After 9-11, airline profits have already been declining for fear of another terrorist attack.
But SARS was definitely the main factor for the massive losses SIA is experiencing.
Nope, i don't think the workers' wages are the contributory factor but retrenching is definitely the quickest way to cut losses. And also, it isn't only the worker wages that are being factored in, you also have to calculate the perks, the equipment that the workers use...etc. Though i admit that i know little of the inner workings of SIA(Although i did do attachment there!), i feel there are also certain maintainance costs that comes along with a worker's wages.
It could be true, considering the 6million a day claim was derived from the claim that SIA has so far have a loss of 300+ million.
It wouldn't be sufficient that's for sure. But it would stem the bleeding.
I think they did consider it, wasn't there a report in today's strait times that SIA is thinking of an airline within airline concept?
Definitely, if you sell off the idle valuable assets you will suffer a greater amount of loss. Considering that these planes are considered as second hand, they would be sold at a significant reduction of its original cost. Any airlines would definitely do that in order to get a sparkly new plane at a fraction of a brand new one.
The losses incurred from such sales if it takes place would be gruesome.
Depends, if you pay good money for this foreigner and thus far they have been generating profits would you keep them rather than keep the locals that has only been taking a role of merely supporting and maintaining the current system ? Perhaps you could bring up an example of another successful industrial country that prefers to retrench the high ranking foreigners first than the local, low level workers?Especially in these trouble times.
There is such a case? I have no idea, never read that article before. Which date was that article published?
Frankly i've read a bit on this issues but i either can't remember or SIA never gave a reasonable reason for fighting so hard to retain the foreign pilots.
But could a possible explanation be that if Singapore is known as a country that retrenches the foreigners first in troubled time, foreigners would be more skeptical to accepting a contract in Singapore in the future? Pure speculation, of course.
No idea about the NTUC portion, probably the top levels reason it would be better to present a united front. Not to say i support it though! -
Hi Steven101 (and to your alter persona XD)
As usual, you offer some valuable alternative points of view, although it can still be twisted and formed into other angles of perspectives.
With regards to the wages, many companies are similarly affected, with some having valid reasons to retrench so as to cut costs, especially when the wage bill form the bulk of the cost; and there is little cash reserves left to help tide over this bad patch.
Unfortunately, some other companies that are cash rich, having accumulated and hoarded a huge cash reserves, are reluctant to depend "on the fat accumulated during the good summer harvest" to "tide over the lean winter period"; but prefer to axe human workers that cost the Company an insignificant sum when compared to other costs.
Singapore Airlines has accumulated enough fat for the last 30 years, with profit making balance sheet at the end of every financial year since its inception.
To achieve an objective of stemming a cash outflow of $6million daily, and assuming that each worker earns an average of $10,000 monthly, Singapore Airlines will have to retrench a total of 18,000 workers.
Since the workers salary are more likely to be $5,000 per head on the average - half of the assumed $10,000 per month, this will require Singapore Airlines to axe at least 36,000 workers.
This will leave Singapore Airlines with practically a skeleton crew in their organization.
By retrenching only 1.4 percent of their total workforce at present, resulting in only 400 plus workers being retrenched, this is hardly of any significant impact to stem the bleeding of $6million DAILY; and only serves to create hardship to those retrenched.
If Singapore Airlines has the resources to “start an airline WITHIN an airline”, will they not need the human staff to man this “new” airline?
There is a contradiction of objectives here – on one hand, the Company has to reduce cost, while on the other hand, the Company is incurring costs by starting up a “New” Airline in the face of weak travel conditions.
If the Company is truly intending to stem the losses, it should consider axing the number of redundant brand new aircrafts that it owns, in the face of the weak travel market conditions.
Each 747-400 cost the company approximately US$200million; and at a depreciated life span of 15 years, it will cost the Company US$13Million per year, or S$62,100 per day PER Jumbo 747-400.
Singapore Airlines own more then 10 of these birds, that easily bring the bill to $6million per day of unused aircraft sitting idle on the tarmac.
This figure does not factor in the interest payable for the loans or cash paid out.
In the end, should one axe the hard physical assets that is the main cause of the bleeding, or the human cost that is a fraction of the total operating cost for Singapore Airlines?
From your perspectives that
“Depends, if you pay good money for this foreigner and thus far they have been generating profits would you keep them rather than keep the locals that has only been taking a role of merely supporting and maintaining the current system ? Perhaps you could bring up an example of another successful industrial country that prefers to retrench the high ranking foreigners first than the local, low level workers? Especially in these trouble times”
this will be a view taken from a cold calculated mercenary way – even though your view is valid from the fact that you are comparing the value of a higher value Foreign asset to the retrenchment of a lower value local human asset.
However, what is the value of Singapore Citizenship then, when your own stake of a treasured job is not protected, and a foreigner is held as a higher value asset than a local – even when both are of equal job status or otherwise?
The article concerning the Foreign Pilots being engaged by Singapore Airlines, through a Company that it owns and registered off-shore, appeared in the Straits Times about two weeks ago, just when this entire dispute hit the headlines.
All foreign workers in any country, are always aware of the loaded contract that they have with the Company of a host country; and it is unless their contribution is almost irreplaceable, they will normally be the first to go then a locally employed worker.
It is hardly believable that NTUC can be objective on this pay dispute between the SIA Management and the Airlines Pilot Association; not when the symbiotic relationship between the NTUC, PAP and the Government is so close, that there is little difference between “Dr Jekkyl and Mr Hyde”. -
Atobe, ur last post should be sent to the straits times. . . recently they dun mind a good blast at the govt here and there too...
And one point, if u axe a couple of jets, u'll prob need to lay off some people too, though much fewer.
SIA's thinking (I may be wrong) is probably that, staff are so numerous and we can always hire more, so we can always lay off now and later just hire some fresh grads at low starting pay if and when we need additional staff. u can't exactly axe the planes now and then buy it back at a later date. will cost them too much compared to kicking some employees out.
Also, the point abt the significance of laying off 400 people when compared to the huge amt SIA is losing every day is especially refreshing. i too wonder what on earth can laying off 400 people do when u lose so much money everyday.
They should probably have formed their new airline BEFORE kicking out the staff. then maybe they can transfer some staff to the new airline. i dun like the part '400 jobs AND "MORE MAY COME"' -
check out today's home section...Originally posted by laser51088:Atobe, ur last post should be sent to the straits times. . . recently they dun mind a good blast at the govt here and there too... -
i still think this is part of the "Ivory Tower Syndrome" that is plaguing Singapore's lea-duh-ship...
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i wonder if this has been done before, as an alternative to retrenchment, to get staff to take 1-2 months no pay leave for the time being, with a new batch going on leave everytime another returns. to lessen the burden, they will be given 3 weeks pay.
during the 1-2 months, the staff will also be allowed to work at another company to tide themselves over should the need arise.
you probably don't save as much $ but you don't lose the company loyalty. -
to atobe...
firing 414 workers wont be much savings... but together with
1... 20 to 25 percent paycut across the board...
2... all staff to take 1 to 2 week no pay leave every month or 2 month...
3... no more OT pay and other fringe benefits..
4... plus cost reduction in other areas such as reducing capacity and others..
i think SIA is really trying hard to pinch the cost factors... and until the customer returns... i dont think.. there are any alternatives...
the SARS thingy bites really really deep into our economy this time... thanks to the PRC's pariah leadership...
now we can only hope for the best.. perhaps ... this could be a blessing in disguise.. -
To "Tripwire"
While I agree with you that SIA is making their best efforts to "pinch on cost factors", I am not sure if they are doing it from the right side first.
Taking the data that is available from the website:
News at SIA Feb 2003
http://www.airlinequality.com/news/singapore.htm
Singapore Airlines said 414 Singapore office, airport and engineering staff - 1.4 per cent of the group's 29,000 workers - would go. "We have always said that we would consider retrenchment as a measure of last resort. I am sad to say that we are now at that point," Chew said. Passenger demand remained much lower than levels before SARS hit Asia and a recovery was not in sight, he said. An airline spokeswoman said she was unable to comment on the report in the Singapore Straits Times that more jobs would go. The Straits Times said the final tally of job cuts would likely fall in the lower end of the paper's previous forecast range of 1,200 to 2,500.
Airline executives have told staff the carrier lost S$370 million ($214 million) from its operations in April and May - over S$6 million a day - putting it on course for a quarterly loss for the April-June period. Due to a slump in consumer spending and weakness in exports, both of which have been hit by SARS, the government expects the Singapore economy to contract in the second quarter with a return to growth not seen until the last three months of the year.
SIA WAGE CUTS REVEALED FOR SENIOR MANAGERS
22 May 2003
Singapore Airlines announced a 27.5 per cent wage cut for senior managers, a day after warning of its first-ever quarterly loss as SARS hammers passenger traffic. Other managerial staff, from deputy managers to divisional vice-presidents, would have their wages lowered by 22.5 per cent, the airline added.
In all, more than 240 managerial staff are affected by the cuts, which take effect from June 1. Chief Executive Cheong Choong Kong, who retires in June, told staff in a farewell speech that wage cuts alone could not reverse losses. The flag carrier, with a 14,500-strong payroll, has declined to reveal the depth of wage cuts for the bulk of staff but does not disagree with reports suggesting cuts of 15 to 28 per cent. The drop in management salaries would bring annual savings of S$12 million ($6.97 million), the carrier said.
SIA ASKS WORKFORCE TO TAKE UNPAID LEAVE
30 April 2003 Source: BBC
Singapore Airlines, the most profitable Asian airline, has asked almost half of its staff to take unpaid leave. The request comes as airlines around the world are being forced into increasingly drastic action to cope with the Sars outbreak.
Singapore Airlines has asked its 6,600 cabin crew members to take seven days unpaid leave every two months until the end of March 2004. Analysts estimate the plan will save the airline Singapore Airlines $100m (US$56.5m) if cabin crew accept it.
Singapore Airlines has already cut 30 per cent of its capacity, or about 199 flights a week. And it is negotiating a similar deal over unpaid leave with its pilots. Staff must choose between the unfavourable offer or face the risk of widespread redundancies.
With regards to the deduction of the Senior Management Pay, it was printed that it will result in a saving of S$12million per YEAR, and with the Cabin Crew taking 7 days unpaid leave every two months until end-March 2004, it will help to achieve a savings of $100million - (presumably it will be annually).
These two cost cutting measures work out a saving of $112million per year, or $307,000 per day.
Can the reduction of the 414 ground staff that figured on 1.4% of the total staff strength of 29,000 - with the prospect of another 1200 to 2500 more in the near future - make any larger impact to stem the flow of $6million per day ?
I would think that the most effective and immediate way to stop the bleeding is to put a stop at the source, and that is the humongous investment in a fleet of more then 91 aircrafts purchased by SIA - with itself operating 81 planes, and the remainder being operated by its subsidiary - Singapore Airlines Leasing Enterprise.
Every aircraft in this fleet is less then 5 years old, and if you look at the financial figures in the website below, you will see the cause of the bleeding in the depreciation figures allowed for all the assets owned by SIA.
With capacity reduction being forced onto SIA due to the changes in worldwide travel conditions, most of these planes can be seen sitting on the tarmac at Changi International Airport in Singapore.
How much longer will these have to be sitting idle, before they are sold off ?
Certainly, the retrenched workers can be hired by the new subsidiary airlines when - and if - they are formed, but what is the cost of the damaged that is being done to morale and productivity ?
This retrenchment exercise is the most unkindest cut that can possibly be effected, when one read the glowing report that is taken from the CEO's report of Staff Productivity in October 2002 - source from Website on SIA Financial Report (below).
STAFF PRODUCTIVITY
The average staff strength of the Company was 14,252, a reduction of 1.1% from the previous year (-165). Staff productivity, measured in terms of changes in seat capacity produced, passenger load carried, revenue earned and value added per employee, improved 3.4%
At this point, it is interesting to note that as recently as October 2002, SIA reported an unusually high profit attributable to shareholders at over 400 Percent for the same operating period in 2001.
Yet, in less then 10 months, SIA is reported to be bleeding $6million a day.
Is someone playing with figures to justify the retrenchment exercises and a change in the direction of splitting up the Airline into smaller operating units, with new GLC airline to be formed by its ex-CEO ?
For a detailed read of the financial numbers, visit:
http://www.scoop.co.nz/mason/archive/scoop/stories/1d/d9/200210291518.877a29ee.html
Other Source taken from:
http://www.pacificislandtravel.com/airlines/singapore_airl/sq_intro.html
http://www.asiatraveltips.com/travelnews2002/2610SIA.shtml -
Hi all. Boy, it is always such a pleasure to read all of your posts.
In response to AtobeÂ’s earlier description of SIA being a black sheep among GLC cluster, I agree totally with both my hands up.
From previous articles and news that I have come across during the days of my academic training, I have to confess that I feel that the Management of SIA appears biased more towards certain categories of stakeholders.
In particular if there are those who have been paying attention to the dividend news, the shareholders are the biggest suck up targets of the management. The second most important stakeholders of the airline company would be its customers.
No doubt we can argue that as a listed company, SIA is obliged to think in the interest of its shareholders, I still feel that their extend of thinking in shareholdersÂ’ interest has gone a little somewhat overboard. So much that IÂ’m suspecting if those of their employees, suppliers or subcontractors had been somewhat neglected to a certain extend.
And notably if one were to observe on the Labour-Management relationship progressing on in many of the other local mass employing GLCs, the Labour-Management conflict in SIA also occurs on a higher frequency and scales of dissent as compared to them.
Stevenson had earlier pointed out that in face with the current demand slump and other environmental factors, SIA didnÂ’t have a choice on retrenchment.
I agree with this view.
However, the truth does not make this recent retrenchment exercise appear less ugly because during normal time of profitability, the majority of the Labour fraction did not really get to see much benefits being handed down to them.
Of course, we cannot deny on the fact that there are factors and considerations such as the contravention against the Employment Act, which bears a clause within that states that the AWC or bonuses of any employee must not exceed see much more than three month, a breach of which would be deemed an offense.
However in spite of this ‘blockade’, I further raises the question on why alternative channels of rewarding and profit sharing thru channels such as allowances were not increased accordingly.
Taking into account that we have the news of a SIA accounting systems and control breach whereby a rouge employee had been able to siphon out mass amounts of monies out from the corporate account, this further prompt me with the doubt on the SIA managementÂ’s competency in dealing with their areas of adequate financial control and planning.
Did they just heck care? Or did they fail to consider all available alternatives conscientiously before they jumped straight into their typical textbook styled retrenchment option?
Agreeing totally with Atobe further on the opinion that the ‘Young Fleet’ policy of the company is indeed perhaps the real underlying secondary factor that is really killing the company from its underside, I am also surprised that as a world class company that is reputed to be staff by the best brains, SIA had not even considered about the idea of leasing out their planes to other smaller airlines.
While the concept of leasing out their new airplanes would have been an utterly stupid and hopeless idea under normal practices, the extremity of the current situation would also call for extreme and creative measures to effectively deal with the stress.
By a laymanÂ’s preliminary understanding of what small airline companies would be facing now, IÂ’m sure everyone would be able to agree on the following points that these smaller companies are:
1) Operating on selected niches only,
2) Possibly on their stretched out timetable to scrap old planes and purchase new second hand ones from other airlines,
3) Facing and dealing with a declining volume of customers as well.
Going by the psychology of such smaller airline operators, the alternative to lease new airplanes would certain come attractive at a stressful time such as current.
Since nobody can be truly accurate in ascertaining when SARS crisis would really ride out, and when consumer confidence and demand in air travel would pick up, the leasing planes would come as a significantly cheaper and lower risked alternative to their typical practice of buying second hand planes from other airlines.
If I were the operator of one such small airline company and amidst the needs to upgrade my fleet to ensure on safe and sufficient capacity, but yet at the same time, tighten my cash buckle, I would have definitely jumped right out at the offer.
Should the SIA management would have thought of this alternative or consider it, perhaps the fate of those targeted or retrenchment staff would have been a lot different today.
And touching on further onto the accounting system further, I must admit that I further surprised on why the SIA management had not even bother to make a request for special permission from the Government to make special withdrawals out from their Capital Expenditure Reserve accounts.
To simply the understanding for non-accounting trained readers, Capital Expenditure Reserves are accounts that store amounts of monies, which can only be extracted for the purpose of purchasing new capital assets.
Under normal circumstances, the monies in such accounts are not allowed to be taken out for alternate purposes. A breach of such would contribute as a contravention of the Company Act, and thus render a company into prosecution.
Given that the bulk of new assets purchase by SIA would be probably lump sums of monies that had been reserved earlier by the company to purchase new planes, the persisting slump would probably remain untouched for yet an even longer period of time until the demand volume really picks up and stabilizes.
Given the severity of the situation whereby SIA is really facing the danger of collapsing right in the face, I can only say that I am shocked that they did not have the courage to consider this available alternative.
All the management had to do was to risk a little face and ask for help from the government to withdraw out a portion that sum.
In face of the current operating difficulty, I believe that the Government would not be so heartless as to deny them of that alternative and to cause thousands more of its civilians being throw out jobless onto the streets.
And for the ordinary wage earner of a family, a small and portion of that released sum of monies could then be potentially used to feed some young and old mouths back in the unseen home of a certain retrenched staff and fill up their stomach.