Radical solution may be needed to save SIA

Year: 2020

This post is written as a brief comment to an article published on The Edge Singapore titled: Singapore Airlines pilots agree to further pay cuts to save jobs (20 September 2020).

“(Full disclosure Mr Devadas is a shareholder in SIA)

FMG feels that the time of reckoning is nigh for SIA Group. The economics of its business case even after cutting 20% of the workforce and imposing punishing pay cuts on the remainder and SGD15 billion rights issue supported by Temasek, is clearly unsupportable.

Gimmicks such as ‘flights to nowhere’ represent a ‘strategy to nowhere’ by senior management.

The fact is compelling that SIA will have to be nationalised to save it. When the crisis of not only COVID has passed but also the ability and confidence in global travel return to pre-COVID levels, which may not be till 2024 to 2026, it can be relisted.

Delaying the inescapable and the inevitable is wishful thinking and a bald-faced denial of the facts, by both senior company management, Temasek as the largest shareholder, and policymakers.

Certainly, no one is suggesting and Singaporeans will resist and resent letting SIA go under. And so ‘follow the money’ leads to only one remaining solution.

It would be radical but does not mean it is not viable or justified. Current shareholders’ interest should be safeguarded during nationalisation as their faith and monies have kept SIA flying over the years as much as revenues.

It is time to think about the unthinkable.”

– Devadas Krishnadas
CEO, FMG