Singapore Airlines Ltd (announced on Monday that it would cut capacity by 96 percent and ground almost all of its fleet in response to coronavirus travel restrictions that the carrier said was “the greatest challenge” it had ever faced.

Shares of the airline were down more than eight percent by 0129 GMT (9.29am Malaysia time), while the broader market was down over seven percent.

The move comes as global travel hub Singapore closed its borders to travellers and transiting passengers in an effort to stem the spread of the Covid-19 virus.

Globally, a shattered airline industry is now seeking state bail-outs to absorb the shock from the pandemic, as widespread travel curbs have forced many to ground fleets and place thousands of workers on unpaid leave to stay 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 that the SIA Group has faced in its existence,” Singapore Airlines said in a statement announcing the cut in planned capacity scheduled up to end April.

The airline said its low-cost carrier Scoot will also suspend most of its network, resulting in the grounding of 47 of its fleet of 49 aircraft.

“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.

Singapore Airlines said it was looking to shore up its liquidity and reduce capital expenditure and operating costs while also asking aircraft manufacturers to defer upcoming deliveries and salary cuts for management.

- Reuters