SIA: All the fault of previous CEO?

In Airlines on 13/05/2012 at 2:28 pm

In a posting on SIA’s results, someone in Oz who seems to know the airline biz laid the blame on the previous CEO. I reproduce it because although I know bugger-all abt the airline biz, I know poster was right abt the property sale (can’t remember the dollar values though):

Chew Choon Seng, the previous SIA CEO from 2003 to 2010,sold the SIA building in Singapore for $250 mil, and the new owner sold it away for $550 mil barely 6 months later. He gave ground handling subsidiary SATS to shareholders as an in-specie dividend, thus making millions in the process through this special dividend and losing control of ground handling in his hub.

He barely ordered any aircraft and kept shrinking the airline, in the name of protecting “yields” that he wanted but could never achieve. He introduced an enormous and absolutely space-inefficient business class, and has the lowest density 77W of any airline, as well as the lowest density A380 of any airline (for the all upper-deck business class A380 configuration)

He cut route after route, and refused to acknowledge Emirates as a competitor (which SIA has only done like, yesterday presumably)

Initially, SIA thought they could charge a price premium for those enormous seats, but today they are among the cheapest network carriers out of Australia and Europe in business class. Low density and low fares = disaster for yields

The only thing protecting SIA today is their strong balance sheet, and the fact that they’re sitting on billions of dollars in cash (which they don’t seem to be doing anything with) and no debt – but that was a result of the hard work of the management before Chew Choon Seng.

And the sad thing is, he inherited an airline in 2003 which was unrivalled in terms of profitability, network and inflight product. (Who had heard of Emirates in 2003). The Singapore economy has been booming for the last decade, and tourist arrivals have surged beyond belief. Labour relations in the airline are healthy, their cost base WAS very competitive (without the low density aircraft), and they operate a single hub operation which, compared to QF and other legacy carriers, should theoretically make their operations far more efficient.

They have also had a surging local currency, which should have helped their fuel prices in SGD. (Do note that from 2002 till today, AUD:SGD has been stuck in a 1.20-1.30 range, not withstanding a few months after the Lehman Brothers collapse, so the SGD basically has risen in tandem with the AUD against the USD for the last decade)

And yet SIA has shrunk through the last 10 years. It’s not like they can blame any catastrophe other than themselves for the dismal financial performance last year.

  1. Their new-ish WIDE business class seats are so UNcomfortable, it is simply shocking! Lousy for BOTH seating and sleeping!!!

  2. haha, the above already made it into the Wikipedia

  3. Please provide the link to the article you quoted from.

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