Singapore Airlines (SIA) on Monday announced plans to cut capacity by 11 per cent, due to falling demand reflected in advance bookings.

Retrenchment will be contemplated only as "a last resort", said the carrier's chief executive officer (CEO), after SIA management met with leaders of the three staff unions today.

Measures discussed to retard or avoid retrenchment altogether include the accelerated clearance of leave entitlements, voluntary leave without pay, voluntary early retirement and shorter work months.

SIA has said if there will be pay cuts, management will be the first to take it.

17 aircraft will be decommissioned from the operating fleet in the coming financial year (April 2009 to March 2010) as part of the capacity cuts, up from an earlier forecast of four aircraft to be phased out.

Mr Chew Choon Seng, CEO, SIA said: "We have determined the capacity to be operated that will enable the Airline to remain viable in a shrinking market, but the removal of surplus capacity will result in redundant resources and will draw sacrifices from every one of us in the company."

SIA does not have a domestic operation to "soften the blow from the slump in international air traffic", he added.

"We have already taken action such as expanding and stepping up training and re-training programmes, and we will contemplate retrenchment only as a last resort."