Singapore Airlines

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http://www.businesstimes.com.sg/transpor...ger-bleeds

SIA's Q2 earnings plunge 43% to S$90.9m as Tiger bleeds
SIA Cargo narrows losses from S$71m to S$34m due to better capacity management

By
Nisha Ramchandaninishar@sph.com.sg@Nisha_BT
SIAporfit071114.jpg Hit by losses from associate Tiger Airways, Singapore Airlines' (SIA) net profit for the second quarter of FY14/15 dived 43 per cent year on year to S$90.9 million. PHOTO: SIA
7 Nov5:50 AM
Singapore

HIT by losses from associate Tiger Airways, Singapore Airlines' (SIA) net profit for the second quarter of FY14/15 dived 43 per cent year on year to S$90.9 million.

However, operating profit for the quarter was boosted some 52 per cent to S$131.7 million as expenditure eased 1.1 per cent, partly due to lower fuel costs. Fuel costs before hedging declined S$115 million, slightly offset by a fuel hedging loss - versus a S$76 million hedging gain in Q2 FY13/14 - leaving fuel costs falling by 2.6 per cent overall.

Revenue was flattish at around S$3.91 billion while earnings per share dropped to 7.7 Singapore cents, down from 13.6 cents a year prior.

The carrier flagged that the operating environment remains challenging, fraught with economic uncertainties and geopolitical concerns. Sliding jet fuel prices - while offering some relief - could end up impacting travel demand as major economies slow down. "Demand is generally flat, and yields will remain under pressure amid intense competition from other airlines and promotional activities in weaker markets," said SIA.

Aggressive capacity expansion from rivals such as the Gulf carriers is causing yields to be sacrificed in order to fill seats. Passenger revenue was slightly higher during the quarter as an increase in passenger carriage was offset by a 0.9 per cent decline in yields. On the other hand, cargo yields were up 2.8 per cent despite cargo revenue slipping 0.5 per cent as capacity was scaled back.

On the cargo front, airfreight demand is set to continue the pick-up seen in recent months in the lead-up to the year-end holidays. At the same time, overcapacity in the market will continue to depress yields, the group warned.

For the quarter under review, share of losses from associated companies swelled to S$104 million - versus a profit of S$34.3 million - as beleaguered associate Tiger chalked up losses from the sale of its stake in cub Tigerair Australia to Virgin Australia as well as from subleasing excess aircraft. Tiger sank into the red with a Q2 loss of S$182.4 million, it announced last month.

Ahead of a proposed rights issue by the ailing Tiger, SIA is converting its perpetual convertible capital securities into new shares, which will lift its stake in Tiger up to 56 per cent from 40 per cent currently. Post-rights issue, SIA's stake could climb to around 71 per cent.

In Q2, exceptional items cost SIA S$10.4 million, as a 793.2 million won (S$943,000) refund in the appeal of an air cargo case in South Korea was offset by a US$9.2 million provision from the settlement in an anti-trust litigation case in the United States.

Meanwhile, the bottom line received a boost from higher surplus from the disposal of aircraft, spares and spare engines, which came to S$44.4 million in Q2 FY14/15, versus S$9.1 million in the corresponding quarter a year earlier. For the first half of the fiscal year, net profit was down 55.5 per cent to S$125.7 million, while revenue slipped 2 per cent to S$7.59 billion as the corresponding period last year had benefited from higher compensation from changes in aircraft delivery slots.

In H1 FY14/15, the parent airline's operating profit was marginally lower, edging 1.6 per cent to S$183 million as lower costs nearly helped to offset weaker revenue. At SIA Engineering, operating profit slumped 33.9 per cent to S$37 million owing to lower airframe and component overhaul revenue and higher expenses.

Battered by a 5 per cent drop in yields, regional wing SilkAir's operating profit plunged 77.3 per cent to S$5 million. South-east Asian carriers have been struggling with overcapacity in the market, which has been putting pressure on yields.

Meanwhile, SIA Cargo narrowed losses from S$71 million to S$34 million, thanks to better capacity management, pushing yields and load factors up 1.9 per cent and 0.2 percentage points respectively.

The group has declared a dividend of five Singapore cents per share, payable on Nov 27.

"With a strong balance sheet, the group is well positioned to meet the challenges ahead," SIA added.

Cash and cash equivalents at the end of Q2 stood at S$5.6 billion, up from S$5.04 billion a year earlier.

The counter closed at S$10.15 yesterday, up two cents.
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http://www.businesstimes.com.sg/companie...er-airways

SIA chief rules out offer for full control of Tiger Airways
Airline wants to focus on restoring financial health of associate

By
Joyce Hooijoyceh@sph.com.sg@JoyceHooiBT
BT_20141108_JHSIA8_1357474.jpg 'Tiger has been ... doing all the right things in positioning itself for the future ... it has cut down on its overseas joint ventures which are not profitable.' - SIA's CEO Goh Choon Phong BT FILE PHOTO
8 Nov5:50 AM
Singapore

SINGAPORE Airlines (SIA) might want to tame the Tiger, but it does not want the entire animal in the house. During a briefing on Friday, SIA's CEO Goh Choon Phong took pains to put to rest speculation about a complete takeover of the troubled Tiger Airways.

"At this point
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SIA definitely does not want any additional stake of Tiger over what it is obligated to take. Simply because, Tiger is facing a massive cash outflow. Next year, 2 planes will be delivered to Tiger and it is likely Tiger has to fork out a few 10M of cash to pay for it, besides taking on debt to finance. Subsequently from 2018-2020, there is another 2.8 billion of payment for its other 23 deliveries, assuming a syndicate LTV loan of 70% led by DBS as the arranger, Tiger still has to fork out $840 M from its cash pile. That means to say Tiger has to generate approx 600M of cash within the next 3 years. It is not able to even generate 200M over the past 3 years. A cash call looks inevitable and likely SIA's tiger stake will be very high in 2018/2019. Unless of course, SIA is willing to share its 5.3Billion cash pile with Tiger

Secondly, SIA engineering is likely to face a downturn. This has been much covered in SIA engineering thread covered by a VB member, CSL123.

Lastly, the parent company too is facing intense pressure against Qatar/Emirates. BA/KLM is now joining in the fray as these two airlines have been aggressively marketing. To top the icing on the cake, our strong Sing Dollar is not helping SIA at all. SIA has enough problems on its own
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Some thoughts about SIA.

Stemming Losses. SIA has already aggressively reduced its loses from Tiger through closing down Tiger Mandela, selling Tiger Australia to VAus and Tiger Philippines to Cebu Pacific. There is really nothing more SIA can do.

Managing Cost. SIA is renewing its fleet with the next generation fleet of aircraft (B787 and A350, B737Max. Subsequently B777X). These aircraft is expected to reduce fuel cost by 10-15% vis-a-vis the legacy aircraft and also, reduce maintenance and improve aircraft utilisation. While this might seen as an capex intensive exercise, this is the right move as savings will go anywhere between 400 - 600 M per year (Fuel cost for SIA is 4B/year), and boost up aircraft revenue generating ability. Top line is not going to grow much, so cost efficiency is the key.

I think the missing piece of the puzzle should be on acquisition. The Company should be on the lookout once it has gotten out of Tiger problem and reaping the cost savings from introducing the new aircraft type. In this industry, the only way to substantially grow revenue is though securing or acquiring more air rights. With average profit margins for airlines industry at ~2%, consolidation is bound to occur and opportunities will present itself.

But more importantly, is this Company of value? My take is that margins will start to improve (at the Company) once new aircraft is being introduced into the fleet, which most likely will happen from 2017 and beyond. But it will take a substantial unfavorable incident (i.e SARS or 911) to push valuation into an attractive level (< 0.6 P/B).
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The ASEAN Economic Community targeted in 2015 should see the setup of the ASEAN Single Aviation Market. This should herald full liberalisation of passenger air services. It can be an opportunity for the Singapore Airlines-Silk Air-Scoot-Tiger Air family provided they adopt a system-of-systems approach and engage the stakeholders early.
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Singapore Airlines to aid Australian tourism campaign
THE AUSTRALIAN NOVEMBER 10, 2014 1:18PM

Steve Creedy

Aviation Editor
Sydney
TOURISM Australia and Singapore Airlines will jointly promote Australia in key European and Asian markets as part of a newly-announced $12 million deal designed to drive inbound tourism and cement Singapore’s status as a transport hub.

The new agreement covers a range of tourism campaigns and promotional activities in the key inbound markets of Singapore, Malaysia, Indonesia, India, UK, Germany and China.

Singapore Airlines will be the exclusive airline partner for all Restaurant Australia campaigns in Singapore, India, Indonesia and Malaysia, providing flights for 30 top food and wine “influencers’’ to visit for the campaign finale in Tasmania this Friday.

It will also provide international flights for Tourism Australia’s key Corroboree Europe trade event in Adelaide next year..

International tourism from Singapore generated $1.1 billion in expenditure in Australia last year and the number of Singaporeans visiting in the 12 months to September 30 rose 14.4 per cent to almost 370,000.

Under its 2020 Tourism strategy, Tourism Australia estimates the Singapore market has the potential to grow to between $2.3 billion and $2.8 billion in total expenditure by the end of the decade..

Singapore Airlines executive vice president commercial Mak Swee Wah said the strategic partnership with Tourism Australia continued to be key in driving inbound tourism in a competitive global environment.

“Combining Tourism Australia’s marketing prowess with Singapore Airlines’ network reach remains a winning proposition in key target markets to bring travellers to Australia,’’ he said.

“Leveraging the opportunities presented across Europe and Asia in partnership with Tourism Australia enables us to reach better conversion rates and cement Singapore as the optimal gateway hub to Australia.”

Tourism Australia managing director John O’Sullivan said Singapore Airlines was one of the organisation’s longest standing partners and Asia continued to be a powerhouse for Australian tourism.

“As one of region’s largest international carriers serving all of Australia’s capital cities, Singapore Airlines is a critical airline partner for us as we seek to drive further growth in our international arrivals,” he said.
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Well, we should take similar precaution as roaming mobile broadband usage, on the newly available service of on-board Wi-Fi...

SIA passenger charged S$1,520 for in-flight Wi-Fi

SINGAPORE — A Singapore Airlines (SIA) passenger said he was charged about S$1,520 for using the Internet during his flight from London to Singapore on Nov 12.

Mr Jeremy Gutsche, CEO of online magazine Trendhunter.com, posted his bill on Twitter the next day, complaining about being “gouged” by the airline. He had subscribed for the 30mb Internet OnAir package at US$28.99 (S$37.63), but was charged an additional US$1142.47 (S$1,483.06) for overuse.

An SIA spokesperson told TODAY: “Mr Gutsche has contacted us with his feedback and we are following up directly with him on the matter.”
http://www.todayonline.com/singapore/sia...ight-wi-fi
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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(15-11-2014, 09:02 PM)CityFarmer Wrote: Well, we should take similar precaution as roaming mobile broadband usage, on the newly available service of on-board Wi-Fi...

SIA passenger charged S$1,520 for in-flight Wi-Fi

SINGAPORE — A Singapore Airlines (SIA) passenger said he was charged about S$1,520 for using the Internet during his flight from London to Singapore on Nov 12.

Mr Jeremy Gutsche, CEO of online magazine Trendhunter.com, posted his bill on Twitter the next day, complaining about being “gouged” by the airline. He had subscribed for the 30mb Internet OnAir package at US$28.99 (S$37.63), but was charged an additional US$1142.47 (S$1,483.06) for overuse.

An SIA spokesperson told TODAY: “Mr Gutsche has contacted us with his feedback and we are following up directly with him on the matter.”
http://www.todayonline.com/singapore/sia...ight-wi-fi
This is a negative statement advert for SIA. No more good service from them to the customers or at least inform them prior to their use. If our customers are not our biggest stakeholders, I don't know who is.

From this issue, I can see how damaging a organisation or country's mgmt can turn out if the top scholarly guy has lose focus of the ground and losing the war in the process.
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(15-11-2014, 09:10 PM)Belg Wrote: This is a negative statement advert for SIA. No more good service from them to the customers or at least inform them prior to their use. If our customers are not our biggest stakeholders, I don't know who is.

From this issue, I can see how damaging a organisation or country's mgmt can turn out if the top scholarly guy has lose focus of the ground and losing the war in the process.

Quote:Price plans are either volume based (e.g. US$9.99 for 10 MB) or time-based (e.g. US$11.95 for 1 hour). When logging in, you must between two options: being automatically logged out once you’ve reached your data limit, or staying logged in even when exceeding your data limit.

Sounds more like a chow kuan customer. Don't blame the SQ management if some CEO does not know the high cost associated with such premium services. By the way, what kind of scholars are the SQ top guys?
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Not sure is it chow kuan or some fault by the flight crew. There should be some agreement form signed before selling this service to avoid this issue. In the end, it all boils down to the SIA brand. In the service industry, customer still is always right. This twitter tweet is a small ripple in the pond that has already show cracks in the armoury.

What I mean by scholarly management is mainly pointing at the top creme who lives in their ivory tower and forgetting the main focus of the business. How can we forget the top leaders of SIA - Pillay, who very much captures the industry's focus on the customer and to create the touch point. Many good people has left to other airlines now and it can be easily seen who are having the best creme now.
Good leaders (Ow, FF Wong, Chaoren) in average companies can do wonders.. While mediocre leaders in good companies lose focus too many times, driving down the cash hoard.

I hope SIA prove me wrong by clearing this amicably and also turning it's business around.
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