Singapore Airlines unveils huge restructuring plan; staff cuts looming

The goal of the overhaul is to help “grow revenue, re-base cost structure and enhance organisational effectiveness”.

Singapore Airlines (SIA) has set a three-year transformation plan aimed at regaining its market position into motion.

CEO Goh Choon Pong wrote in a September company newsletter that this latest decision was made to ensure that SIA "continues to be a leader in customer service, and to claim market and financial leadership once again".

A total of 56 initiatives will be rolled out as part of the plan, to help “grow revenue, re-base cost structure and enhance organisational effectiveness”.

These initiatives range from fuel burn reduction to self-service platforms that will “ease call centre volumes” and provide greater customer service efficiency.

It is unclear if there would be any headcount reduction, but based on this latest announcement, that appears to be likely. Moreover, Goh had hinted at the possibility of staff cuts in public forums earlier this year.

The plan has been five months in the making, as the airline opened a “transformation office” in May to review its business strategy after it recorded a surprising fourth-quarter loss in 2016.

"The team has since been working all across the organisation, aided by 12 work stream coordinators and over 100 staff from various departments and divisions," wrote Goh.

"While it is early days in the three-year programme, I am pleased to report that it has been going very well, and I am confident we are on track to meet our objectives."

Since May, SIA has absorbed the finance division of its regional airlines SilkAir. It also offered unpaid leave options to cabin crew.

National University of Singapore’s (NUS) Associate Professor of the NUS-HEC Paris MBA Programs, Nitin Pangarkar, believes the “drastic overhaul” was much-needed.

“The cost cutting initiatives will improve competitiveness versus other airlines and also profitability which has been under pressure for the last several years,” he tells HRM Magazine.

“Some of the more expensive plans, like fleet renewals, are needed because close rivals have new fleets, but these expenses may be difficult to justify from a purely economic (such as expected payoff) viewpoint.”

His colleague, Professor Jochen Wirtz, agrees the timing could not have been better, as its market leadership in the full service airline sector has been eroded in the last few years.

“Given its culture of being highly cost-effective, this initiative is timely and can potentially squeeze out the extra costs that can make all the difference,” says Wirtz. 

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