Hindus own Sharia compliant airline
Indian media reports say the airline’s founders, Ravi Alagendrran and his wife Karthiyani Govindan, are Hindus, though this could not be independently confirmed.
Hindus own Sharia compliant airline
Indian media reports say the airline’s founders, Ravi Alagendrran and his wife Karthiyani Govindan, are Hindus, though this could not be independently confirmed.
Some Tiger shareholders feel that they are entitled as these spoled brats isit? They think they like PAP ministers isit?
The Securities Investors Association Singapore (SIAS) said in the open letter dated Dec 18 that some Tigerair minority shareholders felt SIA’s offer was “not reasonable”.
The reason for this, Mr Gerald, president of SIAS, was that shareholders who bought Tigerair shares during its initial public offering in 2010 at S$1.50 a share and subscribed to all three rights issues since then would have paid an average of S$0.67 a share. The takeover price is 0,41
Maybank Kim Eng Securities, the independent financial adviser appointed by Tigerair’s independent directors, advised shareholders to accept SIA’s offer, saying the deal is “fair and reasonable”
But because they’hh lose money, these shareholders think that the offer is “unreasonable”.
Europe’s second-highest court has backed a challenge by 11 airlines against an €800m (£583m) European Commission freight cartel fine.
The General Court of the European Union said there were “internal inconsistencies” in the Commission’s 2010 decision.
Of the firms, Air France was fined the largest amount – €182.9m – while KLM was fined €127.2m.
The two carriers merged to form Air France-KLM in 2004.
Other carriers involved were Air Canada, Martinair, British Airways, Cargolux, Cathay Pacific Airways, Japan Airlines, LAN Chile, Qantas, SAS and Singapore Airlines.
Two cock-ups by KL airport
The South China Morning Post reports that Kuala Lumpur International Airport (KLIA) in Malaysia has just come across three ancient 747s that have been sitting on its tarmac for over a year. It says it has no idea who left them there.
What is most surprising about this story, other than the chutzpah of the 747s’ owner, is that KLIA can’t trace the operators. All aircraft are supposed to be logged with a national authority, so one wouldn’t think it could be that hard. The Post says that the airport has contacted a “so-called owner” without response. Malaysians now know where to head next time they have an old banger to dispose of.
The latest is that
An air cargo company in Malaysia says it owns three Boeing 747 jets which officials said were left unclaimed at Kuala Lumpur airport.
Swift Air Cargo says it has been trying to retrieve them, but Malaysia Airports disputes its paperwork.
Only in M’sia. After all this is country where the PM refuses to disclose who deposited US$700m, and where he can still remain PM.
My eyes rolled when I read the CEOs of above two cos recently said that their cos follow the accounting rules. (Remember, credible doubts have arisen over whether their accouting reflects their financial position.)
The best riposte to “We follow the accouting rules” came recently when an ex-convict recently addressed a FT conference.
“There may be a fundamental difference between a company following the rules and a company presenting a true picture of its financial position,” said Andrew Fastow, the infamous treasurer of the even more infamous Enron, to a FT conference.
Or as he puts in another way, that it’s possible for a company to comply with accounting standards while at the same time painting a misleading picture of its real financials.
I tot it tragically funny when he said he went to prison partly for doing things that got him a best CFO award: innovative off-book entities.
Debt of 11.5 billion ringgit ($3.1 billion) is already uncomfortably high for an outfit expected to make 1.9 billion ringgit in EBITDA this year. AirAsia’s part-owned sister airlines, especially in Indonesia and the Philippines, owe it increasing sums: amounts due from associates were nearly 2.5 billion ringgit at the end of 2014.
The gloomy case, as made by Hong Kong’s GMT Research, is that this cannot last. AirAsia is booking profits from affiliates that it cannot collect. While restrictions on foreign ownership mean it is only a minority shareholder, it effectively controls these airlines and should consolidate their accounts. Facing up to reality would force a big equity issue.
AirAsia counters that its accounts are transparent, debt is coming down, and cheap fuel and reduced competition should make for a “very good year”. Selling and leasing back planes will help cut debt. It’s also planning to publish pro-forma consolidated accounts.
Fernandes says local partners in Indonesia and the Philippines will each inject over $80 million of fresh equity, and both units will sell $100 million-plus of convertible bonds, before floating in 2017. Some of this will be used to pay back sums owed to the parent.
Well, perhaps. But new investors in the affiliates will need to be comfortable with much of their cash going to repay debts, while also believing in a bright future for these units. As HSBC analysts note, both are sub-scale and face powerful local rivals in Lion Air and Cebu Air.
The real moral of the stories of Noble and AirAsia is that when one makes money or is in fashion, no-one cares about accounting details, But when the fashion changes, or one loses money, the daggers come out and the hyenas and vultures circle.
And don’t like a lost co, set up a website and slime away
TRE and its anti-PAP cybernut posters are cheerfully running down SIA because it is ranked 29 in safety terms below even Chinese air;ines
Why always running down S’porean co and seeing Chinese cos no ak?
Given its safety record (when was last time anybody died in SIA crash?) It may have found the sweet spot between costs, safety and efficiency?
And btw, since when have TRE posters (Chris K excepted) been able to afford to fly. Going by their comments about public tpt fares, they can’t even afford to travel by bus.
Why always running down S’poreanco and seeing Chinese cos no ak?
Given is safety record (when was last time anybody died in SIA crash?) It may have found the sweet spot between costs, safety and efficiency?
Really? If that is so, how come No.1 ranked Cathay Pacific is more profitable than SIA? Me thinks the disgraceful way SIA treats its frequent flyers is the reason it is falling behind. Have now gone with One World (Cathay and BA) – ended my 15 year Gold membership at SIA recently.
Thailand’s aviation sector is under scrutiny after an international safety audit led to a ban on new flights to China, Japan and South Korea.
Last week the International Civil Aviation Organization (ICAO) issued an alert flagging “concerns relating to air operator certification procedures”.
Last week the ICAO issued an alert which triggered increased physical inspections of aircraft operated by Thai airlines serving existing routes to countries such as Australia and Singapore, a regional air hub, as well as a ban on airlines expanding their services.
Fly SIA and associates. Don’t be cheap skate! Can die die if fly Thai. ))))
Update at 5.30am
From CNA on Thurday
The surveillance and ramp inspections of Thai carriers’ aircraft operations in the Republic have been stepped up, said the Civil Aviation Authority of Singapore (CAAS) in a news release on Thursday (Apr 2).
Its statement came after the International Civil Aviation Organisation(ICAO) reported “significant safety concerns” in Thai carriers earlier in the year. The Thai government has since said it would urgently improve airline safety in the country.
CAAS added it has not imposed any restrictions on Thai airlines. This is unlike other countries like Japan, who blocked new flights from Thailand last week – a move which affected charter services by budget carriers such as Thai AirAsia X and NokScoot.
In the release, CAAS said it has in place a Foreign Operators Surveillance Programme (FOSP), under which foreign carriers are required to have an Operations Permit from CAAS to operate in Singapore.
The release said that CAAS evaluates an application for an Operations Permit “using a risk-based methodology”, which takes into consideration factors such as the safety oversight capability of the State of Operator, the operational capability of the carrier and the safety records of the aircraft.
“In assessing a foreign carrier’s operations, CAAS takes into consideration safety information from other aviation authorities including the outcomes of the inspections or audits they conduct,” it added.
“CAAS also conducts periodic ramp inspections on the foreign carrier’s aircraft when they are in Singapore; the frequency of which is dependent on CAAS’ assessment of the carrier.”
The regulator assured that any major deficiencies found in the ramp inspections have to be addressed by the carrier for it to continue operations in Singapore.
Despite aging body etc.
No not Auntie Sylvia (Quah Kim Song finds her a stunner) but S’pore Auntie: she’s still there in top 10 as is her rival Cathay. Keep on cursing anti-PAP paper warriors.
This dog has fleas on its fleas. But it bears keeping track of if it cuts its prices steeply relative to the airlines, and complaints pile up. This may never happen given that SIA is it’s parent and may not want to have its reputation for service being tarnished, albeit at a distance.
AMERICANS claim they loathe Spirit Airlines, the discount carrier that earned the worst possible scores in all six of Consumer Reports’ airline-ranking subcategories last year. But the company’s financials show that people, mystifyingly, keep flying on Spirit.
“The customers we seek to attract overwhelmingly ranked total price as the most important variable when choosing an airline,” Ben Baldanza, Spirit’s boss told investors earlier this week. Given its abysmal customer-satisfaction scores, some of the customers it attracts probably never fly it again. But some do—and as long as the company can keep prices low (in part by charging added fees for just about everything), it can keep attracting new customers who feel compelled to save money.
Malaysia Airlines’ 19,500 staff operate a fleet of 108 aircraft, while SIA operates 103 aircraft with 5,000 fewer employees. The result is that over the past nine years the Malaysian carrier has lost a net Rm3.56bn ($1.1bn), while Singapore Airlines has made S$8.86bn ($7.1bn) without a single year of losses.
Says a lot about how S’pore Inc and M’sia Inc do things.
Really I can’t see why SIA was attacked for saying on Facebook and Twitter that its flights were not using Ukraine airspace.
Reuters reported: That triggered a flood of angry responses, with many lambasting SIA for not offering condolences to the victims’ families and for mounting what some perceived as a publicity stunt during a crisis involving its neighboring country’s flagship airline.
Anyway SIA did the pragmatic thing by apologising and rewording its messages. No pointing rowing with loonies, something PM Lee should learn. https://atans1.wordpress.com/2014/07/11/how-pm-roy-can-resolve-matters-satisfactorily-roysw-defence-work-in-progress/
The Daily Mail reports that, despite the conflict, the flight path was fairly crowded with a Heathrow-bound Virgin Atlantic jet and a Singapore Airlines plane both over Ukraine at the moment flight MH17 crashed.
The paper says the Singapore jet was just 17 miles away from the doomed flight.
One of the as-yet unknown questions, is why flight MH17 came to be flying over a conflict zone in which a number of aircraft had been shot down recently, the Daily Telegraph says.
MAS polot didn’t want to divert
The paper reports that a number of airlines, including British Airways, easyJet and Qantas had already changed flight routes to avoid the area, although Malaysia Airlines said there had been “no obvious reasons” to avoid the area.
Nonetheless, the paper says, flight path analysis suggested that other Malaysia planes had skirted the conflict zone, by flying south of the area.
The Telegraph says an expert from the Royal United Services Institute has learned the pilot of the downed flight decided not to change course after apparently telling air traffic controllers he “felt uncomfortable” over the diversion.
Extract from BBC
According to Flight radar24, which monitors live flight paths, the airlines that most frequently flew over Donetsk in eastern Ukraine in the last week were: Aeroflot 86 (flights), Singapore Airlines 75, Ukraine International Airlines 62, Lufthansa 56, and Malaysian 48. It was not necessarily a risky approach. The chance of a rocket reaching above 32,000 feet was considered remote, says Sylvia Spruck Wrigley, author of Why Planes Crash.(Part of BBC report: see pix of flight routrs taken http://www.bbc.com/news/blogs-magazine-monitor-28364306 )
SIA flew 56% more flights thru Eastern Ukraine than MAS, yet it was a MAS jet that waz shot down .
SIA employs better bomohs?
“But although the aircraft was reportedly a few hundred miles north of its planned course to avoid a thunderstorm, its altitude should have marked it as a passenger plane,” reported an Economist blog.
Not seen this in any other report.[Update on 20th July at 10.15 am http://www.theguardian.com/world/2014/jul/19/mh17-changing-course-storms-pilot?guni=Keyword:news-grid%20main-1%20Main%20trailblock:Editable%20trailblock%20-%20news:Position1:sublinks ]
Home Team’s Immigration and Checkpoints Authority has been in the sights of DPM Teo and netizens (a rare distinction: err where’s the co-driver?) for a series of recent balls-up. So the tragic disappearance of a MAS plane gave its PR team an opportunity to blow its trumpet, (justifiably, no BS or hype)
Visitor passports presented to immigration officers at Singapore checkpoints are screened against Interpol’s database of lost or stolen travel documents, said the Immigration and Checkpoints Authority (ICA) on Tuesday.
And if a passport is one of more than 40 million on Interpol’s list, the officer is automatically alerted and the traveller pulled aside for further checks.
This procedure has been in place since May 2008, an ICA spokesman told The Straits Times.
He did not elaborate on how the system works, but security experts said that this verification typically takes just a few seconds.
But despite the fact that checks are quick, Singapore remains one of only a few countries that use Interpol’s database to ensure border security, experts noted. (Wed ST)
EDB, and the tourism board should be following this up with a regional advertising campaign:
“Taking a flight of more than an hr? Transit via S’pore: all passports are checked against Interpol’s database of lost or stolen passports. Does yr airport do this? Or are they like KL?”
BTW, a gd riposte to the M’sian Home Affairs minister’s comments
“I am still perturbed. Can’t these immigration officials think? Italian and Austrian (passport holders) but with Asian faces,” he was quoted as saying late on Sunday.,
would be for immigration officers will say that they use to seeing Chinese and Indian faces on MALAYsian passports. So no issues about seeing Asian faces on European passports.
Seriously comment shows he has prejudices, hangups or is still living in the mid 20th century.
Changi Airport Group: Winner’s curse?
The Aeroportos do Futuro group led by Odebrecht SA, and including Singapore airport operator Changi Airport Group, offered 19 billion reais (US$8.3 billion) and won the right to run Galeao airport in Rio de Janeiro, which will host tourists for the soccer World Cup next year and the 2016 Olympic Games, for 25 years. The consortium offered nearly four times the minimum bid for the right to operate Rio’s Galeão airport for the next 25 years.
We will only know the consortium overpaid if we know the next highest bid. Will let you know if this info is made public in Brazil )))
Last chance to buy Olam?
More bull points to add to this:
— When Olam released its quarterly results in early November, it showed it had generated positive free cash flow – the first time in four years for a seasonally weak quarter.
Its executive director of finance and business development A Shekhar told analysts and reporters: “We’re very pleased that we’re striking the right notes on both objectives of profit growth as well as free cash-flow generation.”
— Ang mohs are still sceptical about the parts of the stock’s biz model.
— But they bulls on Africa and Olam got an edge there. Africa is now seen a destination mkt, not juz an exporter of commodities i.e. origination mkt:
The commodities houses are attracted to the African destination business for three reasons. First, demand is rising fast, in many cases at double-digit annual rates. Second, many African governments subsidise basic commodities such as petrol and wheat, in effect guaranteeing a return to the traders. Third, most African countries lack the infrastructure needed to import raw materials, from silos for storing wheat and rice to terminals for unloading petrol. The commodities houses say that, as they build this infrastructure, they will be able to secure a market and benefit from years of rising demand. (FT report on Africa dated 10 November 2013)
Even Chris Balding flies SIA
Would the Temasek model help improve the efficiency of China’s state-owned enterprises? Only one (Singapore Airlines) or possibly two (DBS bank) of Temasek’s GLCs have established themselves as international brands, according to critics such as Chris Balding of Peking University*. SingTel has made successful foreign acquisitions, but other GLCs have fared less well. STATS ChipPAC, a semiconductor firm, lost money in the second quarter of this year, as a result of the costs of closing a factory in Malaysia.
The few academic studies of Singapore’s GLCs are more encouraging, however. A 2004 article by Carlos Ramirez of George Mason University and Ling Hui Tan of the IMF showed that the country’s GLCs enjoyed a higher market value, relative to the book value of their assets, than comparable private firms. They also generated a higher return on assets, on average.
In judging the performance of Temasek’s GLCs, the counterfactual is important. They may not be as obviously successful as private titans from the region such as Samsung or LG. But they are not nearly as bad as most SOEs, including China’s. The enthusiasm for reform of SOEs in China reflects their deteriorating returns and accumulating debt. According to M.K. Tang of Goldman Sachs, their return on assets was 6.5 percentage points below that of other Chinese firms in 2012 and their shares trade at a growing discount. Even Mr Balding, meanwhile, is happy to fly Singapore Airlines.
*Cock Balding forgets Keppel and SembCorp in rigbuilding. More on these two cos later this week.
Singapore Airlines (SIA) has reported a 78% rise in net profit for its second quarter*.
This reminded of a story in the New York Times, some time back, that Delta Airlines by slicing an ounce off its on-board steaks saved US$250,000. It even calculated that removing a single strawberry from its First Class salads would save US$210,000.
Talking after looking after the pennies, and the dollars will look after themselves.
In investing, John Bogle, the founder of indexer Vanguard, keeps stressing the importance of buying funds that charge low fees. The expenses saved when compounded over time adds to performance. Besides most active fund mgrs underperform the market., so they mare a waste of money. Indexers charge very little in comparison with active managers.
*Asia’s second biggest carrier was boosted by the sale of aircraft, spare engines as well as increased passenger traffic.
The firm posted a total net profit of $128.6m (£80.9m) for the quarter, up from $72.1m a year earlier.
But it warned it was facing tough competition and a strong Singapore dollar. (BBC report)
Airbus has won a record order for 234 A320 planes worth 18.4bn euros (US$24bn) from Indonesia’s Lion Air.The order trumps last year’s record order for 230 Boeing planes – also from Lion Air.
Last Saturday, Bloomberry Resorts Corp’s was opened by Philippine President Benigno Aquino.
Big casino operators will be scrutinising the Philippines’ debut as Asia’s newest top-end gambling destination this weekend to see if Manila can deliver on promises of better profit margins and lower costs than global betting capital Macau, says Reuters.
They also want to know whether Bloomberry Resorts Corp , whose shares have climbed 40% in the last six months on hopes of quick returns, can overcome national security concerns and flawed infrastructure to bring in VIPs from China to place bets at its US$1.2 billion Solaire casino resort.
Its rivals are Melco Crown Entertainment Ltd and Genting Hong Kong Ltd, with their respective local partners Belle Corp and Alliance Global Group Inc.
“There are high rollers coming in to play … I am expecting at least 1-1.5 billion pesos (US$25 million to US$37 million) to be wagered tomorrow night,” Cristino Naguiat, head of local regulator the Philippine Gaming Corp (Pagcor) told reporters.
The advantage that the Philippines has is that junket operators are welcomed, unlike in S’pore. Junket operators have a reputation for laundering money, and ties with organised crime.
Bangkok skytrain operator BTS Group Holdings Pcl has received commitments worth $850 million from 20 cornerstone investors for Thailand’s biggest initial public offering, a source with direct knowledge of the plans told Reuters on Friday.
The investors in the infrastructure fund IPO include insurer AIA Group Ltd, hedge fund Azentus Capital Management and global asset managers Fidelity and Capital Research and Management, added the source, who was not authorized to speak publicly on the matter.
BTS on Friday week filed a prospectus for the up to $2.1 billion IPO, but the document did not include the names of the cornerstones.
The fund will likely yield between 6-6.2%, Reuters reported.
PT Matahari Department Store (LPPF)’s owners raised 12.7 trillion rupiah (US$1.3 billion) selling stock in the Indonesian retailer, Bloomberg reported.
CVC and Lippo Group sold 1.167 billion shares at 10,850 rupiah. The shares were initially offered at 10,000 rupiah to 11,250 rupiiah
The sellers, seeking to capitalize on investor optimism about consumer spending in Indonesia, asked for as much as double the median valuation among department stores in emerging Asia, price-to-earnings data compiled by Bloomberg show T(he shares were offered for as much as 28 times Matahari’s forecast 2013 earnings). Jakarta’s stock benchmark is up 11.3 percent this year and hit a record high earlier this month.
Temasek GIC is a cornerstone investor despite selling some shares too.GIC also committed to buy a 1.8% stake in the share sale as a cornerstone investor at the same time as its private equity arm was one of the main selling shareholders. Temasek too was a cornerstone investor. There were 15 cornerstone investors each with less than 5%.
(Update: Last para amended and expanded on 24 March 2013.
The Mitsubishi UFJ Financial Group “is among banks considering a purchase of TPG Capital’s $1.6 billion stake in Indonesia’s PT Bank Tabungan Pensiunan Nasional, two people with knowledge of the matter said,” Bloomberg News reports.
A bid by Malaysian low-cost carrier, AirAsia, to set up an airline in India has won approval from the Indian government.
It would be the first foreign company to try to capture the rising demand in India’s aviation sector.
AirAsia India would be a joint venture with the well-known Tata Group, based in Chennai in South India.
India’s aviation industry, which has suffered major losses, was opened to foreign investment last year.
The government now allows foreign companies to own up to 49% of a local airline.
AirAsia, which is Asia’s largest low-cost carrier, will make an initial investment of 800m rupees ($15m; £10m) and will own 49% of the new airline, while Tata Sons will have a 30% stake. Part of BBC report
(And that of every other Asian legacy airline like Cathay, Qantas, Thai and MAS)
When SIA sold to Delta its 49% stake in Virgin Atlantic for US$360, which it has owned since 1999, it said it was selling because of increased competition in its local market, where it wants to keep its focus.
In the same week, last week, AirAsia announced a US$9bn order for 100 A320 planes. AirAsias’s order is for 64 of the A320neo (new engine option) and 36 of the A320ceo (current engine option) aircraft.
Background info on SIA sale, so I don’t get dumb comments
It’s in crisis. Deep crisis.
Auntie’s still a great way to fly but its record in investing in other airlines is horrible: think NZ Air.
And now the Arab airlines are stealing its premium customers via slightly better service, and just as good connections via the Gulf hubs. And lower costs: our S’pore Aunties are no longer that cheap. But bit susa to pass of PRC, Pinoy FTs as S’pore Gals. Only M’sians can get away with pretending to be S’poreans.
Good backgrounder (added at 8.50am on day of posting)
VietJetAir, a budget airline. had beauty contestants in bikini-tops dance aboard a plane on its first flight from Ho Chi Minh City to Nha Trang, Tuoi (Waz that?). The airline said it wanted to capture a “holiday atmosphere” for its new flight route to one of the country’s most popular holiday destinations. “Once passengers stepped on board they were met by flight attendants dressed in beach holiday attire [who] performed a sexy Hawaii dance,” it said. BBC article. Authorities were not amused: it was fined for not getting prior approval. Sounds so S’porean, this fine.
Back to the gals in bikini tops: they make S’pore Gal look like auntie: like SIA falling behind its rivals from the Middle East in the premium business, JetAir and AirAsia in the budget segment.
So rather than juz redesign its cabins and seats, as SIA announced last week, time to replace Auntie and rethink strategy?
Its got the brain power. Senior mgt are SIA veterans. There was an attempt a few yrs ago to put a scholar, ex-general as a senior VP with the aim of making him CEO. He didn’t get the job and disappeared without a trace. Thank God, even though he RI boy, as I got one lot of SIA.
The Air Transport Rating Agency (ATRA) has published its second annual list of the world’s ten safest airlines. The Geneva-based operation based its list on an assessment of 15 factors, using 2010 data.
SIA has not made it into the top 10 again. This year, its greatest rival, Qantas, made it into the top 10.
ATRA’s ten safest airlines (in alphabetical order only): Air Canada, Air France-KLM, AMR Corporation, Delta Airlines, International Airlines Group, Lufthansa, Qantas, Southwest Airlines, United-Continental, US Airways.
But as the Economist’s travel blog points out:
Only one of the ten airlines in ATRA’s list (Qantas) makes it into the top ten of the most recent Skytrax world airline awards, which are derived from over 18m passenger responses and have a much more Middle Eastern/Asian tone. This either suggests that passengers do not consider safety when naming their favourite carriers, or they disagree with ATRA’s particular emphasis.
Anyway, I’m publicising this rating so that the likes of KennethJ, Chris balding, Dr Chee and his sis, Richard Wan and other TRE staffers and avid readers, TOC editorial staffers and Core Team, xmen and others of their kind, have a good excuse not to patronise SIA. They can fly Qantas instead. Actually, Dr Chee already has a good excuse already: he can’t leave S’pore without permission, and I don’t think permission has ever been given.
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.
US airline buys an oil refinery. Taz thinking out of the box.
Pros and cons
It’s not as though SIA doesn’t have the cash.
Yesterday, a piece in MediaCorp’s freesheet by an NTU academic reminded me of the narrative that the PM and our “constructive”, “nation-building” local media are trying to tell us about the Qantas dispute, strikes, lock-out and all. It is about a struggling airline trying to cut costs to compete but its unionised workers are prepared to bankrupt it if their demands are not met.
There is truth to this narrative. What the unions fear most is a plan announced in August that would cut 1,000 jobs and some long-haul routes while setting up a new premium airline based somewhere in Asia and forming a joint venture to operate a low-cost carrier in Japan. The unions want guarantees of job security. Qantas says that these and other demands risk destroying its commercial viability.
What you won’t hear, from the PM or the local media or the NTU academic, is that it could be possible that Qantas could be more generous to the workers, and still remain competitive.
If the dispute goes to arbitration (what Qantas wants and which is now likely to happen), the eventual ruling may not be in Qantas’s favour overall, Australian analysts are saying. Since its domestic routes are highly profitable, the arbitrator may decide it can afford to be more generous to workers than it claims.
“Trust No One” especially our local reporters and editors, and local academics writing in the local media. But let’s be fair to our local media. Writing before World War II, George Orwell observed, “Early in life I had noticed that no event is ever correctly reported in a newspaper”. He was referring to the British press.
And “The Truth Is Out There”.
Qantas has unveiled its strategy to meet the competition from low-cost carriers.
What is interesting is that it has taken a different approach from SIA, another legacy airline. SIA is planning to add a low-cost carrier to complement its existing premium and other legacy services. This is a conservative approach but one that risks cannibalising customers from its non-premium legacy services
But Qantas is taking a more aggressive approach. It is turning Qantas into a low-cost carrier with a premium service subsidary that will be based in Asia.