Singapore Airlines will cut capacity by 96%, ground almost all of its fleet and look to raise funds, the carrier said on Monday, in response to coronavirus travel restrictions it called the "greatest challenge" it had ever faced.
The move comes as global travel hub Singapore closed borders to travellers and transiting passengers in a bid to stem the spread of the virus.
Shares of the airline, majority-owned by Singapore state investor Temasek, were down more than 9% by 0350 GMT, outstripping losses in the broader market that was down 7% and on track for its biggest daily drop since October 2008.
The airline industry worldwide is seeking state bail-outs to absorb the shock from the pandemic, as widespread travel curbs have forced many to ground fleets and order thousands of workers on unpaid leave to keep afloat.
"This will result in the grounding of around 138 SIA and SilkAir aircraft, out of a total fleet of 147, amid the greatest challenge the SIA Group has faced," Singapore Airlines said.
The company has drawn on its credit lines in the last few days to meet immediate cash flow requirements and is in talks with financial institutions over future funding needs, it added.
"It's important to have access to liquidity, to pay leases, to pay employees and to be able to continue to function. This is a positive, but the cost of funding remains uncertain," said K. Ajith, an analyst at UOB Kay Hian.
In a report issued on Monday before the announcement, UOB Kay Hian had said the carrier needed "backstop liquidity" of at least S$5 billion ($3.43 billion) by June.
It faces S$2.5 billion of marked-to-market losses by the end of March from having taken out fuel hedges at high prices, the broker said.
Low-cost carrier Scoot will also suspend most of its network, leading to the grounding of 47 of its fleet of 49 aircraft, Singapore Airlines said.
"It is unclear when the SIA Group can begin to resume normal services, given the uncertainty as to when the stringent border controls will be lifted," the airline said.
The cuts are in line with those made by Hong Kong-based rival Cathay Pacific Airways Ltd, which slashed passenger capacity by 96% in April and May.
Singapore Airlines said it was looking to shore up liquidity and lower expenses by asking aircraft makers to defer deliveries and adopting salary cuts for management, among other steps.
The airline's cash balance of S$1.57 billion by the end of December 2019 was nearly 19% higher than a year earlier.
The airline will focus on protecting jobs, Chief Executive Goh Choon Phong said. The group had more than 26,500 employees in the financial year that ended in March 2019.
The company has engaged the unions in talks on further cost-cutting measures.