SIA Cargo to be re-integrated into Singapore Airlines

After operating for more than 16 year as a standalone company, SIA Cargo will be re-integrated into its former parent, Singapore Airlines, by the first half of 2018, as the struggling carrier moves to improve efficiency across the wider SIA Group.

The announcement came in the wake of SIA Group’s net loss of US$99 million for the quarter ending in March.

“Re-integrating SIA Cargo as a division within Singapore Airlines makes sense from a business standpoint,” said SIA CEO, Goh Choon Phong. “It will improve efficiency and offer greater flexibility for staff deployment by maximizing synergies with the larger SIA business.”

Singapore Airlines stressed that there will be no change to SIA Cargo’s operations. SIA Cargo will continue to operate its fleet of seven 747-400Fs, while the cargo division will continue to manage the bellyhold space for SIA’s passenger subsidiary carriers, SilkAir and Scoot.

SIA Cargo became a separate company in 2001 and grew to a fleet of seventeen 747-400Fs. At the time, SIA Cargo was better suited to carry out its expansion as a standalone all-cargo airline, SIA Group said, but the airfreight market has taken a beating since then. Meanwhile, passenger operations – and the belly capacity that entails – grew rapidly, especially in Asian markets.

Singapore Airlines said that the market has since seen a “structural change,” necessitating a drawdown in fleet size to the current roster of seven aircraft. Even as freighter demand fell, the proportion of revenue from passenger aircraft bellyhold capacity has increased significantly.

SIA Cargo’s overall capacity, including that from passenger aircraft, grew between 4 and 5 percent in each of the past two fiscal years, the carrier said.