SINGAPORE (Mar 9): Airline gateway services and food solutions provider SATS is slapping on more pay cuts amid the spread of the novel coronavirus (Covid-19).
On Feb 19, SATS had already unveiled a series of cost reduction measures, including a 10% reduction in pay for the senior management team.
But the company on Monday offered a bleaker outlook amid the outbreak, and said it has decided to effect further cuts in executive pay and to reduce directors’ remuneration.
Retroactively, from March 1, 2020, SATS’ board of directors and its executives will receive a cut in pay or fees.
Leading the way for the belt-tightening exercise is the president and chief executive officer, Alex Hungate, who will see 15% pay cut.
SATS’ non-executive directors will also see a 15% reduction in their fees.
Salaries for the group’s executive vice presidents and senior vice presidents will be slashed by 12%, while pay for its vice presidents will be trimmed by 10%.
Meanwhile, effective April 1, 2020, all managers to assistant vice presidents will also take a 5% pay cut.
“The rapid spread of the Covid-19 virus to Europe and America over the past weeks has led to a significant drop in demand for air travel globally, with a corresponding reduction in revenue for SATS across all markets,” the group said in an outlook update on Monday.
It warns that this reduction is expected to “substantially and adversely affect profitability” for 4QFY2019 and FY2019 ending March 2020.
The latest profit warning comes just over three weeks after SATS on Feb 13 cautioned that “depending on the duration of this epidemic, there will be consequential impact on the short-term financial performance”.
Even as it braces for the short-term impact to its bottom-line, SATS says it is in a “strong position” to weather the disruptions.
It adds that it is looking out for acquisition opportunities amid the crisis.
SATS last week announced the acquisition of UK-based aviation food solutions innovator Monty’s Bakehouse for $48.4 million.
Incorporated in 2003, Monty's Bakehouse has been providing its range of sustainably-packaged, handheld snacks to a growing roster of premium airlines and other customer segments across the world.
SATS and Monty’s Bakehouse will establish an innovation centre in Singapore as a test bed for innovative food products for aviation catering, buy on board retail, and adjacent markets.
SATS will also work with Monty's Bakehouse to develop sustainable food packaging solutions that reduce cost, waste, and logistical complexities using minimal plastics.
See: SATS acquires aviation food solutions innovator Monty's Bakehouse for $48.4 mil
As at 9.28am, shares in SATS are trading 3.2% lower, or down 13 cents, at $3.90.
