'Singapore International Airlines\r'

'Contents COVER LETTER4 1PROSPECTS OF parsimony5 1. 1Global fiscal Crisis5 1. 2Oil hurts5 2PROSPECT OF skyway INDUSTRY5 2. 1General style of the public life path business intentness5 2. 2Analysis of warringness of industry6 3VALUE CHAIN7 3. 1Training of Pilots/ Cabin work go bady/ Ground dis race supply7 3. 2 branding and publicity7 3. 3Reservations and Ticketing7 3. 4Ground opeproportionns7 3. 5In-f ignition Services8 3. 6 jobcraft Ope balancens8 3. 7 give-up the ghost Management and keep8 3. 8Customers8 4SINGAPORE AIRLINE’S COMPETITIVE ADVANTAGE8 4. 1The 4 comp nonp arilnts of SIA’s war-ridden schema8 5FINANCIAL bid ANALYSIS9 5. direct Performance Analysis9 5. 2Liquidity Analysis10 5. 3Solvency Analysis10 5. 4Profitability Analysis10 5. 5Stock expenditures Analysis11 5. 6Comparison with Industry second-rate11 6SINGAPORE AIRLINES’ NON-FINANCIAL PERFORMANCE11 6. 1L causeing and Growth11 6. 3 essential solvees12 7RECOMMENDATIONS12 8APPENDI X13 9REFERENCES32 C everywhere Letter To: Ms Leo, CEO From: enthronement Team Subject: Investment plow †capital of Sin disturbanceore air ducts Ltd This report contains an summary of capital of capital of capital of capital of capital of Singapore airline businesss Ltd (SIA) with response to your interrogatory on desirability of making a clean wide-ranging medium-to- macroscopical term coronation in the sh atomic number 18s of SIA.\r\nFirstly, an analysis of the prospects of the air passage business line industry which SIA operate in would be stipulation to begin a better understanding of the air environment. The menstruum country of miserliness leave alone excessively be one of the soaringlights as it is perhaps one of the biggest concerns amongst investors. Next, the order’s value chain and competitive strategies would alike be presented and study to justify if SIA pee the ability to sustain its growth despite many reality-wide ch all in all enges such as the pecuniary crisis and superior c over colour damages.\r\nOn cap of that, an analysis of the company’s past financial averments and especially for the division 2007/08 would be presented to analyze the profitability and quality of earnings. For a much than holistic approach, analysis of the company and industry employ non-financial performance measures would also be expendd to treat numbers where financial measures be insufficiently informative. Comparisons with the industry and main competitors will also be made along the way to show how they fargon and if the production line scathe has the potential to grow amongst unswerving competition in the airway industry.\r\nLastly, recommendations on the desirability of the investment would be given on our stand based on our analysis. 1Prospects of providence 1. 1Global financial Crisis The origination’s p reticence is presently facing one of the worst financial little terrors ever s ince the Great Depression in 1929. dying of US strands such as Lehman Br opposites were due to coarse corporate debt default which caused them to incur a large disadvantage loss. This tight quotation crunch caused the dusk of the worldwide transport merchandise with fearful investors withdrawing their investments.\r\nIn response to the gloomy give awaylook of the worldwide economy, assumption was given by the G7 as they announce to let on a 5- localize intention to counter the crisis and to stabilize the financial market place. 1. 2Oil Prices The air lane industry was drastically hit by the rocketing of aviation provide impairments for the past one year , forcing many companies to amplify air ticket prices to blot out the change magnitude expenditure. Expenditure is accelerating at a meteoric rate than revenue; hence this has caused many airline companies to suffer a loss in operating(a) profit. However, basket average out crude oil prices has been on a decli ning grade. â€Å"Prices fell $18. 1/b or more than 14% in August, declining sharply from the rule book levels r severallyed in July,” according to OPEC Monthly Oil marketplace business relationship kinfolk 2008. 2Prospect of air hose Industry 2. 1General Trend of the Airline Industry The current situation in the airline industry remains bleak. It is caused by a mix of weakening rider demand, particularly in the First and communication channel castees, and the live uncertain global economic do-nothingdidate. Cargo demand has also plummeted, with a 6. 5% lose in demand for Asia-Pacific carriers in July 2008. However, SIA has been able to anticipate changes and continue to break invigorated grounds.\r\nThe procurement of A380 Airbus has attend toed SIA achieve substantial embody savings. In addition, conversion of five Airbus A340-500 aircraft into an wholly- short letter Class set-up, and constantly ensuring that force trounce matches SIA’s demand , w aste be to be profi board for SIA alone despite the general weakening passenger demand. 2. 2Analysis of competitiveness of industry Since SIA’s everyplaceall profitability is mostly influenced by the battlefront of competition, we feed used Porter’s vex of Five Forces to analyze the competitiveness of the industry. Threats of substitutes\r\nOver the age, the airline industry has be cum change magnitudely competitive with entering of sore competitors such as budget airlines. As such, some passengers be choosing to fly budget airlines for curt travelling distances. Hence, demand from guests are becoming comparatively price e getic, forcing some firms to lower their prices in hunting lodge to stay competitive. buyer Bargaining Power Buyer bargaining originator is increasing due to the price transparency concerns of customers, as they can admit which airline to take. However, on the industry level, bargaining power is low. provider Bargaining Power\r\nS upplier bargaining power in the airline industry is superior as the in instal required (aircraft, aviation give the sack) is unique and thither are no similar substitutes available. Rivalry among existing players The intensity of competition among airlines has change magnitude substantially over the age as firms are narrowing the gap of the renovation quality and on board amenities. This has light-emitting diode to increasing ferocity in rough-and-ready cost management for firms. Threat of Entry at that place are substantial barriers to ingress for the industry due to the gamy initial fixed outlay and proprietary know-how.\r\nHowever, the entry of budget airlines poses potential threats to the existing players. Many firms suck responded by buying bundles in firms of budget airlines. 3 nurse chain of mountains 3. 1Training of Pilots/ Cabin crew/ Ground handling staff SIA’s places great emphasis in educational activity by continuously sending its employees for comp rehensive and pixilated provision. To present only the best service, SIA also imposes taut selection shields of employees at the recruitment stage. 3. 2Branding and publicity SIA’s spending on advertising has been static over the recent years.\r\nRecently, TBWA replaced Batey self-assurance which popularised the simulacrumic Singapore fille . SIA adopts a global approach to advertising in the external media, keeping the Singapore Girl icon as its archetype of high quality service. 3. 3Reservations and Ticketing SIA’s website allows race cartridge clip carry over downloads for gadgets such as pocket PCs and medal tops and synchronizes the data when it is amended. SIA’s ticketing accessible occasions are set in over 70 countries and it operates 24 moment telephone reservations and service call centres to encourage its customers.\r\nThe use of interline e-ticketing allows ticket information to be stored in SIA’s secured database and appointd among airlines on the customer’s itinerary. 3. 4Ground Operations SATS handles all ground operations which includes baggage/ airfreight handling and apron serve. Technology such as profits check-in, biometric checks and downtown check-in services are deep-rooted to speed up processing time. The application of neary automate Seamless Travel (FAST) integrates three processes comprising airline check-in, pre-in-migration security system measure checks and immigration croakance.\r\nSIA’s loyalty customers also have the privilege of priority check-in and enjoying scoop shovel facilities at its lounges. 3. 5In- escapism Services Its in- career on-demand cheer system has over a thousand demand options and office software system for passengers. Also, SIA also integrated the full size ‘space- bash’, on-board kalemail and internet services in its First and cable cliquees. 3. 6Aircraft Operations SIA flies directly to 66 destinations and has deep o utgrowthd outflows to more popular destinations. SIA has transformed its cabins to full business variety lavatorying for its SG-NY flights and will be doing the analogous for its SG-LA Flights. . 7Fleet Management and maintenance SIA maintains young make passs of passenger and cargo planes. These render efficient planes are on the average age of 6-7yrs. It leases 34 out of its 126 aircraft on an agreement of range 4. 7-10. 5 years with options to sub-lease. SIAEC has also joined Airbus’ Maintenance Training Ne twork, bountiful it retrieve to Airbus’ latest training methodologies. 3. 8Customers SIA’s KrisFlyer customer retentivity scheme has been utile to date and it now focuses on services for wealthy and business travellers, in alliance with the PPS club . Singapore Airline’s free-enterprise(a) Advantage Through the value chain comparability with competitors, SIA has achieved two differentiation and low cost strategies in its operations and stands out as a attractor in the industry. 4. 1The 4 components of SIA’s competitive strategy 4. 1. 1Rigorous service founding, development and continuous innovation SIA’s service development department constantly researches for and tests out tender innovations. It uses the centralized innovation approach which involves three-step processes. The resultantive feedback channel helps to find out that any useful suggestions are adopted.\r\nEmployees are also sent on ‘ blemish flights’ on competitor’s planes to report their findings . SIA’s continuous innovation supports cost effectiveness and it transfers this borderline to its customers. Some examples are processions in seat and riddle size, as well as in-flight services, which compares favourably to its competitors . 4. 1. 2Profit and cost- acidulous brainpower of employees SIA’s employees are well aware of the implications of high costs and they always strive to achieve custome r satisfaction in a cost effective manner. Compared to the industry, SIA maintains a comparatively young yet evoke efficient fleet. 4. 1. 3Holistic Staff Development\r\n every(prenominal) employees have a training and development plan which includes both serviceable and interpersonal skills. SIA’s aircrew is unionised in team up up ups of 13 and flies together for at to the lowest degree 2 years . Hence, these have helped to develop team bonding for delivering beautiful service. 4. 1. 4Strategic synergies through variegation and world-class infrastructure SIA has reaped strategic synergies through diversification of its subsidiaries: SIA Engineering Company, SATS, SATS In-flight catering and tiger airways. Diversifying has helped to avoid subtle competition and to capture a larger market partake in by disco biscuiting more types of services.\r\nHence, SIA comfort gains the general market share through its 49% stake in the low-cost carrier tiger Airways slice foc using on wealthy and business travellers, 5Financial Statement Analysis 5. 1 direct Performance Analysis tax income from the company’s operating activities increased by 12. 5% and expenditure increased by 7. 7%, causing the operating profit to increase by 60. 1% from 2007. Also, net cash provided by operation activities was has been positive and on an increasing trend. This tremendous advancement in operating profit is due the increased demand for SIA’s flights. 5. 2Liquidity Analysis 5. 2. 1immediate ratio The ratio slobberped from 1. 4 in 2007 to 1. 29 in 2008. This is largely due to the company recognizing more gross sales in advance of carriage under current liabilities. However, the boilersuit quick ratio trend has been greater than 1. This indicates the relatively stronger liquidity position to outfit current debts, especially compared with its competitors . 5. 3Solvency Analysis 5. 3. 1Debt-to-Equity Ratio The ratio dropped from 0. 12 in 2007 to 0. 11 i n 2008. The result projects an optimistic outlook because the company was able to complete their leveraging of unseasoned A380 planes without relying on outside bullion and the value of the ratio is lower than its competitors.\r\nThis indicates SIA’s strong ability to fall cash from operating activities for future growth. 5. 4Profitability Analysis 5. 4. 1 birth on comely Equity Holders’ breeds The rejoinder on average candour holders’ funds dropped from 14. 9% in 2007 to 13. 56% in 2008. The study reason bum the decrease was due to sale of SIA building and investment in Singapore Aircraft Leasing Enterprise Pte Ltd in 2007. The preposterous events led to a satisfyingly large tote up of profit in 2007. Hence, the drop in return on average legality holders’ funds is not a big concern.\r\nCompared to the 2006 rule of 9. 61% and 2005 figure of 11. 01%, the company has been more successful in generating returns for its paleness holders. 5. 4. 2Earnings by and by Tax per Share ( weaken) This is a cautious measure that takes into account of the employees exercising their share options. The diluted earnings after tax per share dropped from $1. 71 in 2007 to $1. 66 in 2008, largely due to the one time sale of assets in 2007 mentioned supra. The drop is not a concern because it still shows an increasing trend. 5. 4. 3Dividends per Share\r\nThe overall trend of the dividend payout is positive and investors are expected to receive a fair share of dividends one-yearly . 5. 5Stock Prices Analysis The general price trend of SIA line of businesss shows an upwards inclination. It r separatelyed a peak at slightly November 07 and prices have been decreasing since. wizard of the reasons why stock prices started to decrease is due to rising fuel prices. In aspect of the recent financial turmoil, the unstable economy is expected to have a significant shock on stock price. As compared to its major competitors, the stock price decr ease was fortunately not as drastic.\r\nAlso, we should note that this is a temporary mark to market loss suffered and not a permanent impairment loss incurred by SIA. 5. 6Comparison with Industry Average Overall, SIA’s financial performance is above industry average in parity. 6Singapore Airlines’ Non-Financial Performance Non-financial performances are an integral part of a company which is bound to affect a company’s financial position in the long run and will determine its sustainability amidst stiff competition. A comparison with their closer competitors is also world considered . 6. 1 knowledge and Growth\r\nSIA places large emphasis on its employees. One of its strategies to train its employees includes company-wide Core Developmental Competency Framework, which seeks to help staff identify their strengths and opportunities for improvements. SIA base also has sevener training schools to deliver training in severally aggregate functional areas. This includes the Transforming Customer Service (TCS) first step and general management training. Furthermore, SIA has in place share-based profits course of studymes which aim to more directly align the interests of elderberry bush management with the interests of shareholders. . 2Customer perspective One of SIA’s strengths lies in its superior customer service and excellent facilities on board. On top of that, SIA also places large emphasis on the prophylactic of its customers on air and have introduced confused brisk methods and equipment on board with the customers’ offbeat and convenience in mind. SIA’s efforts in providing excellent customer service are evident by the many awards and accolades they garnered over the past years. These awards have compound their reputation and enabled them to dominate in the Airline industry. 6. 3 Internal Processes\r\nSIA’s Value Chain was analyzed to gain better understanding of its internal process. 7Recommendat ions From the above analysis, we understand that the airline industry that SIA operates in is exceedingly volatile and competitive. Coupled with the problem of rising fuel prices, the future do poses many challenges for SIA. However, having analyzed SIA’s strategies and operation style, we can see that SIA has been effective in managing the challenges faced to date, despite it being a relatively small and young airline compared to the other players in the industry.\r\nThis is evident from the good financial performance of SIA. Thus, our team is optimistic round SIA’s growth prospects for the coterminous 5 to 10 years and we predict that an winsome return can be guaranteed if the shares were bought. However, in view of the financial turmoil, we suggest putting the investment plan on hold first and wait for share prices to plummet to a sufficiently low point before buying the shares. Ultimately, this will help our company to take advantage of the low share price and maximize returns in the future. 8 addition addendum 1 term 1 From The Times\r\nOctober 9, 2008 Interest rate cuts overshadowed by spectre of recession IMF says world is heading for major downturn Patrick Hosking, Banking and Finance Editor Interest rates crosswise the world were slashed yesterday as central banks took unprecedented emergency action in an effort to contain the worst economic threat since the Great Depression. Hours after the Government unveiled a ? 500 billion rescue package for the British banking system, the Bank of England joined forces with its counterparts across the Western world to cut rates by half a percentage point.\r\nThe unneeded mediocre level of coordination was designed to license resolve in the face of financial panic attack save failed to vivify confidence in the stock market. Share prices rallied briefly in London scarce the FTSE vitamin C index closed down 239 points at 4,367, its lowest point for quaternity years. In its bleakest indica te for years, the International Monetary Fund said that the world was entering a major downturn in the face of â€Å"the most dangerous shock . . . since the thirties”.\r\nThe US and Europe were either on the doorsill of or already in recession. supplement 2 Article 2 Home > breakage intelligence activity > Money > Story Oct 11, 2008 G7 vows to fight crisis WASHINGTON †convention of Seven finance chiefs on Friday unveiled a five-point plan to fight the global economic firestorm and restore confidence in the financial system by shoring up struggling banks. ‘The G7 agrees today that the current situation calls for urgent and exceptional action, the US treasury said in a statement on behalf of the G7 nations. We commit to continue working together to perk up financial markets and restore the flow of recognise, to support global economic growth, it added after the finance ministers and central bank chiefs from the G7 nations †the United States, Ge rmany, Japan, France, Britain, Italy and Canada †met in Washington. Appendix 3 graph 1 Appendix 4 publisher pull up 1 The Straits Times, October 19 2008 Money role Appendix 5 Exhibit 1 Airline Industry’s Value Chain and competitive advantage The diagram below describes the Primary activities that is include in SIA’s Value Chain Appendix 6 Article 3\r\nSIA stays the course with its branding strategy American advertising office staff TBWA took over the coveted account from Singapore- based agency Batey †the name behind SIAs ad campaigns for the past 35 years.. … Many marketing experts, who were looking for a significant change in SIAs branding strategy, were surprised by the lack of it, while others felt the ads werent much of a head turner… SIA spokesman Stephen Forshaw says critics have got it all wrong. Branding is not only well-nigh advertising. More importantly, it is about the substance behind the brand. ‘It perplexes me that people think the winder to branding is advertising.\r\nIts not, he says. ‘The key to branding is get the fundamentals of the business right first. ‘Advertising is tho a way of communicating amid the face and its customer base. ‘ … … But there remains a key constant †the Singapore Girl icon. ‘The representation of the Singapore Girl is what the brand delivers to customers †that is very high quality service, Mr Forshaw says…. … A significant application of biometric technologies presently being developed at SIA’s hub at Changi Airport in Singapore is the FAST (Fully Automated Seamless Travel) process.\r\nIn November 2004, a six-month pilot test of FAST has been initiated based on a biometry technology that integrates three processes: airline check-in, pre-immigration security checks, and immigration clearance… … This initiative at Changi Airport is a world’s first of integrating these processes with th e clear objective of driving service righteousness at airport operations and SIA’s ground services, while at the analogous time driving efficiency and improving security.. Appendix 7 get across 1 Kris Flyer Programs The table below describes the KrisFlyer courses of SIA. aim Benefits\r\nYoung Explorer Club•Earn and pitch miles for free travel just like other KrisFlyer members •Miles earned go towards qualification for higher tiers of rank and file Kris Flyer elect(ip) Silver•25% grant on actual miles flown whenever you fly Singapore Airlines, SilkAir or Virgin Atlantic. • antecedency Reservation Waitlist and Priority Airport Standby Kris Flyer Elite Gold•25% tier bonus on actual miles flown each time you credit the miles you earn on Singapore Airlines, SilkAir and Virgin Atlantic. •Increased report Baggage Allowance (20kg, or one extra piece of baggage). Priority Airport Check-in and embarkation and baggage handling • Acc ess to Star coalition Gold Lounges. PPS Club•Exclusive Gift Vouchers to purchase items from our inflight shopping service, KrisShop. •Enjoy reduced or waived fees for various KrisFlyer services. •Travel Assistance and Insurance. •25% tier bonus on actual miles flown each time you credit the miles you earn on Singapore Airlines, SilkAir and Virgin Atlantic. •If your reservation for a seat in First or Raffles/ business sector Class cannot be corroborate immediately, you will be avered the option of a guaranteed seat in Economy Class on the same flight. 100% increased check-in baggage hire on all Singapore Airlines and SilkAir flights • Extended employ of Silver Kris Lounges. •Access to Virgin Atlantic Clubhouses. Solitaire PPS Club •25% tier bonus on actual miles flown each time you credit the miles you earn on Singapore Airlines, SilkAir and Virgin Atlantic to your KrisFlyer account. •Supplementary Card for your spouse, who w ill be accorded the same level of service as you whenever they travel. Appendix 9 Article 5 greet-effective service morality: lessons from Singapore Airlines An additional source of intelligence is SIA’s â€Å"spy flights”, where advisors travel with competitors and report on their offerings… … SIA builds team spirit within its 6,600 crew members through its â€Å"team concept”, where small teams of 13 crew members are formed and then fly together as far as possible for at to the lowest degree two years. This leads to the development of team spirit and brotherly bonds within the team that reinforces the culture of cost-effective service excellence and the peer pressure to deliver SIA’s promise to customers…. Appendix 10 instrument panel 2\r\nThe tables below show the comparison between the in-flight facilities provided by SIA and their competitors. Airline comparison in terms of screen door size AirlineEconomy ClassBusiness ClassFi rst Class another(prenominal)s Singapore Airlines10. 6’15. 4’ liquid crystal display23’ LCD (1280×768 Pixels)100 movies, 180 TV shows, 20 receiving set stations, 65games, 700 practice of medicine CDs, office software, noise cancelling headsets Cathay9’ widescreen15’ widescreen17’ widescreen100 movies, 350 TV shows, 22 radio stations, 888 CDs, 70 synergetic games, noise cancelling headsets Qantas6. 3’10. 2’8. 3’60 movies, 200 TV shows, 20 radio stations, 10 games, 150 music CDs, noise cancelling headsets\r\nAirlines comparison in terms of in-flight services AirlineSingapore AirlinesQantasCathay 1st Class- 88. 9cm wide, ok grain leather seats †Flat fundament †Adjustable table height †Dressing table with mirror †Plush duvet, fluffy pillows †Ferragamo Toiletries †Givenchy Sleeper cortege and suede slippers †Power outlet †noise cancelling headsets- 198cm long flat rump †Light meals/ snacks available anytime †build in massage capability in each president †Payot paris toiletries †Akira Isogawa pyjamas, eyeshades †Power outlet †encumbrance cancelling headsets- 205. 7cm long, 63. 5cm wide flat bed †Personal military press for clothes, hoes, mattress, pillows †Extra large tray table †Mood fire †Adjustable culture light †construct in massage capability in each chair †Acca Kappa creature comforts set †Power outlet †reverberate cancelling headsets Business Class- 1-2-1 layout with 76cm width seats †Flat bed †Light duvet, large pillows †Computer usage with USB ports and keyboard †Business lounge †Snack corner †Eau de toiletries †Power dismission †Noise cancelling headsets- 2-2-2 layout †Shoe compartment †Coat Hook †Built in massage capability in each chair †Meal and cocktail table †Adjustable reading light †Inflig ht bar †Marc Newson amenities kit with\r\nKorner skincare product †Power Outlet †Noise cancelling headsets- 2-3-2 layout with 198cm long, 52 cm wide seats †Flat bed †Built in massage capability in each chair †Extra large tray table †Mood Lighting †Adjustable reading light †Extra large tray table †Agnes B Amenities kit with Murad/Dermalogica skincare products †Power Outlet †Noise cancelling headsets Appendix 11 Table 3 Average Age of Aircraft Average Age of Aircraft, 31March 20082007-20082006-20072005 †20062004 †2005 SIA passenger Fleet (Months)77757664 SIA Freighters (Months)88766865 Industry Wide (Months)162160159157 Appendix 12 Table 4\r\nOperating Performance of Company The CompanyCathay Qantas in S$ one million million million 200820072006200520082008 Revenue12,759. 6011,343. 9010,302. 809,260. 109753. 27715051. 7 Expenditure-11,115. 60-10,316. 90-9,651. 80-8,562. 20-8751. 65-13774. 2 Operating Profit1,644. 001,027. 00651697. 91001. 6271277. 527 Percentage Change60. 10%57. 80%-6. 70% 33. 40% (compared to previous year) Cash Flow from Operating Activities4269. 43163. 52309. 62786. 62,540. 032,101. 91 Appendix 13 Table 5 brisk Ratio Calculation rapidly Ratio = nimble Assets/ Current Liabilities (Quick Assets exclude inventories & prepaid assets) The GroupCathayQantas n S$ million 200820072006200820082008 Current Assets8,313. 308,248. 805,938. 304,943. 90339075616. 2 Inventories507. 7534. 1517. 5442. 5882215. 7 partition 44 tax prepayments-46. 7166. 2221. 4†Prepayments104. 986. 1—- Quick Assets7,700. 707,581. 905,254. 604,280. 00330255400. 5 Current Liabilities5,957. 705,258. 404,842. 503,901. 60273947603. 9 Quick Ratio1. 291. 441. 091. 101. 210. 71 Appendix 14 Table 6 Debt-to-Equity Ratio Calculation Debt-to-Equity ratio shows the composition of debt and equity in the capital structure and measures the degree to which the company relies on outsider for funds.\r\nDebt -to-Equity Ratio = integral long-term liabilities/ Total stockholders equity The GroupCathayQantas in S$ million 200820072006200520082008 long Liabilities1,599. 201,805. 801,824. 402,333. 304860. 20913. 5022 StockholderEquity15,125. 2015,100. 0013,470. 6012,342. 3016759. 325753. 29 Debt-to-Equity Ratio0. 110. 120. 140. 190. 290. 16 Appendix 15 Table 7 Return on Equity Holders Fund Calculation Return on equity holders’ funds = Profit attributable to equity holders of the Company / Average equity holders’ funds (Percentage) The GroupCathayQantas 200820072006200520082008 in S$ million Profit attributable to equity holders2049. 2128. 81,240. 701,309. 507023969 Equity Holders funds15,125. 2015,100. 0013,470. 6012,342. 30505495731. 2 Average equity holders funds15112. 614285. 312906. 4511898. 747967. 55683. 05 Return on equity holders funds13. 56%14. 90%9. 61%11. 01%14. 64%17. 05% Appendix 16 Table 8 Earnings after Tax per Share (diluted) Calculations Earnings after tax pe r share (diluted) is computed by dividing profit attributable to equity holders of the Company by the weighted average of ordinary shares in bring out excluding treasury shares, adjusted for the dilutive effect on the exercise of all outstanding share options.\r\nThe Group 2008200720062005 Profit attributable to equity holders of the Company(S$ millions)2,049. 402,128. 801,240. 701,352. 40 Adjustment for dilutive potential ordinary shares (S$ millions) (5. 10) (4. 80) (3. 60)- set net profit attributable to equity holders of the Company (S$ millions)2,044. 302,124. 001,237. 10- plodding average number of ordinary shares in issue (million)1,216. 001,233. 601,219. 501,218. 20 Adjustment for dilutive potential ordinary shares (million)14. 910. 02. 1- Adjusted weighted average number of ordinary shares (million)1,230. 901,243. 601,221. 601,218. 0 Diluted earnings per share (cents)166. 1170. 8101. 3111. 0 Appendix 17 Table 9 Dividend Schedule The Group 2008200720062005 Interim dividen d (cents per share)20. 015. 010. 010. 0 Proposed final dividend (cents per share)80. 035. 035. 030. 0 Dividend pay off (times)1. 71. 72. 32. 8 Appendix 18 Exhibit 3 SIACathay PacificQantas Airways SIACathay PacificQantas Airways 52 Weeks Range Volatility47%63%59% Highest Price in 52 Weeks$19. 90$24. 00$6. 06 Lowest Price in 52 Weeks$10. 52$8. 77$2. 50 Appendix 19 Table 10 Figures for Industry Averages are taken from Reuters (www. reuters. com) Industry AverageGroups Average\r\nQuick Ratio0. 921. 29 Interest Coverage0. 0426. 42 Return on Assets0. 19%8. 10% Return on Equity-0. 04%13. 60% Appendix 20 Table 11 Non Financial Evaluation in the form of a BSC Learning and Growth Aspects of MeasurementMeasuresEvaluation Employee DevelopmentEmployee training programmes implemented •Implementation of a company-wide Core Developmental Competency Framework. Consisting of eight core competencies, it allows staff to identify strengths and opportunities for improvement. •Three areas ha ve been prioritised for followup action: Pay and Benefits, Career Development, and Working Relationships.\r\nThis shows that they are concerned about its employees’ welfare, not just giving them financial satisfaction. •Introduced a web-based self- learn security program for cabin and technical aircrew. •Seven training schools Employee satisfactionEmployee benefits schemes •Short-Term Incentives short incentives generally take the form of an annual profit-sharing bonus. requital of the variable bonus is based on employees achieving the order levels in the following: (i) SIA Group’s Return on Shareholders’ Fund; (ii) SIA Company’s Operating Profit Margin; and iii) SIA Company’s Passenger Load Factor •Long-Term Incentives The Company has put in place share-based remuneration programmes allowing employees to share in its growth and success. These plans comprise the Performance Share designing (PSP), Restricted Share Plan ( RSP) and Employee Share alternative Plan (ESOP). InnovationNew technology and innovations•KrisWorld, Singapore Airlines award-winning and ever-expanding inflight entertainment system, offers customers a wide range of entertainment options. Customers can choose from a variety of movies, TV programmes, music CDs and channels.\r\nThere is also an extensive selection of picture games and interactive applications including Berlitz Word Traveler, a fully interactive learning programme. These techonology implemented allowed them to be one of the best airlines in the industry to offer such entertainment system. •Uses Three-step centralized innovation process. Examples are the recently launched design of the Airbus A380 cabin. Customer Overseas presenceNetwork Development•As of 31 March 2008, Singapore Airlines operated 726 weekly flights to 66 destinations in 36 countries.\r\nIncluding codeshare services with Star Alliance and spouse airlines, the Airline’s globa l route communicate grew to 149 destinations in 46 countries. •In August 2007, SIAEC acquired 100% of Aircraft Maintenance Services Australia to offer line maintenance services at international airports in Australia. The learning is part of the Companys continuing effort to capture a larger slice of the global maintenance, repair and overwhelm (MRO) market by extending its reach o new growth markets and to broaden the span of its services to offer total maintenance solutions to airlines.\r\n safeSafety measures introduced•Introduced a web-based self-learning security program for cabin and technical aircrew. It also successfully established its second renewal of the IATA Operational Safety Audit. The visit covered key operational areas across the Airline, including flight rubber eraser, emergency management, engineering maintenance and ground handling. The Airline is also working closely with other sanctuary organisations, such as IATA and AAPA, to promote and enha nce flight safety. Service rangeNew services improvements to current flights•KrisShop launches new online sales portal krisshop. om, featuring an online catalogue and selections exclusive to Singapore •ECONOMY CLASS Improved design and use of light, bladed materials which provide more personal space and legroom. Other features include a non-intrusive reading light installed underneath the seatback screen, personal storage space for spectacles and smaller items, and adjustable footrest. •BUSINESS CLASS The A380 is configured with 60 Business Class seats. All seats offer direct access to the aisle, with a 1-2-1 forward-facing configuration. The new Business Class seats onboard the A380 are the widest in its class for any airline.\r\nAt 85-cm wide, the seat is similar but slightly bigger, than the Business Class seats fitted on the Airline’s Boeing 777-300ER fleet. Business Class on the A380 also features a Passenger Corner, specially created for these custom ers to natural selection up snacks and socialise during long flights. •AIRLINES KRISWORLD Customers can choose from more than 1000 entertainment options featured on the new KrisWorld, including movies, television programmes, music, learning applications and 3D games. Screens across all classes are bigger: 58cm in Suites, 39cm in Business and 30cm in Economy.\r\nSingapore Airlines customers flight of steps on the A380 and B777-300ER, are also able to work. Inflight through a comprehensive suite of office applications which can be accessed via the handset and without a laptop. All seats come with their very own USB port and in-seat power supply. •INTERLINE E-TICKETING Singapore Airlines ranks as the first non-US carrier, and third in the airline industry, in implementing interline e-ticketing. As of March 2008, 97% of all tickets issued from the Airline’s sales channels were e-tickets. All Singapore Airlines’ stations in the network are e-ticket enabled.\r\n According to IATA ranking in March 2008, Singapore Airlines has 120 Interline e-ticketing partners, among the highest in the industry. Corporate Social ResponsibilityRaising funds for charities •Over $1. 9 million was raised and distributed to charities in Sydney, Singapore and the global humanitarian organisation, Medecins Sans Frontieres. Singapore Airlines announces it will auction seats in the world’s first A380 flight on the global online marketplace, eBay. All money raised from the auction is to be donated to four charities. The auction starts on 27 August 2007 and runs for two weeks.\r\nEnvironment•The A380 is a cleaner, greener, new generation aircraft †fuel slew, compared to a Boeing 747, on a per-seat basis is 20% less, and its noise footprint at take-off and landing is about 95% lower than any aircraft introduced 40 years ago. It is the cleanest, most environmentally friendly large passenger plane to take to the skies. Importantly, it will also h elp to deal with congestion at busy airports by offering more seats without the need for more frequencies. And it is delivering a substantially lower fuel burn per seat mile than the older generation large passenger jets. Image and reputationAwards and Accolades September 2008 Business traveler Asia-Pacific â€Å"Best Airline” for the 17th concomitant time in its 2008 Readers Poll. •Best Asia-Pacific Airline, Best First Class Best Business Class and Best Economy Class. With ten editions worldwide, Business Traveller is the worlds leading issue geared towards frequent business travellers. •Worlds Best Awards 2008 hatful â€Å"Best International Airline” for the 13th consecutive time in its. The magazine has a readership of closely five million. February 2008 •Air Transport World (Global) Airline of the Year March 2008 •Frost & Sullivan Asia Pacific Aerospace & falsification Awards (Asia) Airline of the Year\r\nBusiness Process Proc ess efficiency Solutions to improve business efficiency • insertion of A380 to cater to high demand from customers and also try to cut costs that was passed on from high oil prices since the use of bigger airplanes will be more cost efficient as opposed to flying smaller airplanes with more frequency. In addition, five new Boeing 777-300ER aircraft were delivered. These raised the number of Boeing 777 aircraft in the operating fleet to 72, reaffirming Singapore Airlines’ position as the world’s largest operator of the Boeing 777 family. The four-time weekly service via Moscow started in March 2008, boosting the number of weekly passenger flights between Singapore and the USA to more than 50. Frequency was increased between Singapore and cities in Asia and Europe to meet growing demand for air travel. This shows that they continually increase their frequency to meet demands and improve services towards customers. Employee EfficiencyValue added per employee•T here is an improvement from $497,662 to $530,859 which is an increment of 6. 7% over the last financial year. Appendix 21 Table 12 Comparison with Close Competitors\r\nSIACathay PacificQantas Learning & GrowthAir pack training -4 month long training for stewardesses which includes both functional and interpersonal skills -Promote team dynamics by organizing aircrews in teams of 13 and flies together for at least 2 years Self Learning †Web-based self-learning security program for its cabin and technical crew to increase efficiency in learning Air Crew training †Staff alignment survey to ensure better employees’ expectations. †Leading-edge training and development programmes to enhance the skills of our workforce. -Business-driven learning Confidential counselling through our Employee Assistance Programme. Air Crew training †Comprehensive training program that covers topics including customer service, medical aviation, aircraft and personal safety, eme rgency procedures. †QGFT provides high level practical and theoretical training in dedicated facilities. Internal Business Processes-Cost cutting solutions to improve business efficiency through introduction of Airbus 380 which offers the state of the art aircraft and that it also cuts back on fuel costs. †Diversity of businesses by tapping into budget airline Tiger Airways. Average fleet age of 6. 41 years-Cost cutting solutions to improve business efficiency by in public announcing plans to replace a few older aircraft with new fuel-efficient plans and retrenching employees. -Average fleet age of 11 years. -Cost cutting solutions to improve business efficiency through introduction of Airbus 380 which offers the state of the art aircraft and that it cuts back on fuel costs. -Overly pore on cost cutting such that safety is being compromised, and they are currently under management by CASA -Average flight age of 9. 3 years Diversity of businesses by tapping into budget a irline and currently holds stakes in Jetstar. Customer Perspective- Close blood and builds loyalty through branding. †Excellent in flight entertainment on board that is crucial for continuing flights. †Low safety concern: Introduced a web-based self-learning security program for cabin and technical aircrew and has correct its second renewal of the IATA Operational Safety Audit. The Airline is also working closely with other safety organisations, such as IATA and AAPA, to promote and enhance flight safety. Build and maintain a good social public figure and reputation- Excellent in flight services on board with brand new state of the art in-flight entertainment system with audio and video on demand for the business class. †Low safety concerns and they emphasized that safety is of utmost importance: established the mount Safety Review Committee and Airline Safety Review Committee †Safety problems have been an issue recently with numerous cases of technical prob lems and causing flight delays. The Civil Aviation Safety Authority (CASA) told Qantas to improve the maintenance of its planes, after several flights had been cancelled or delayed due to engine problems. ” †Social image declining due to adverse news reports about concerns over safety levels. Appendix 22 Article 6 Singapore worlds best airline STUART INNES 20 September 2008 SINGAPORE Airlines, the first to have daily international flights through Adelaide Airport, has been named best airline by Business Traveller Asia-Pacific magazine The readers votes also gave the airline wins in categories for best first class, best business class and best economy class.\r\nThe gongs come on top of other awards to Singapore Airlines such as the annual Skytrax survey, which voted it airline of the year. US-based magazine Travel + Leisure readers voted Singapore Airlines as best international airline in its 2008 Worlds Best Awards. 9References Books Loizos Heracleous, Jochen Wirtz & Nitin Pangarkar (2006) Flying High in a competitive industry: Cost-effective service excellence at Singapore Airlines McGraw-Hill Educatiion (Asia) Databases Factiva http://global. factiva. com. ezlibproxy1. ntu. edu. sg/sb/default. aspx? NAPC=S&fcpil=en Journal Articles Shank, K.\r\nJ. and Govindarajan, V. (1992). Strategic Cost Management and the Value Chain. Journal of Cost Management, Winter 1992, 5(4):5-21 Chivaka, R. (2007). Strategic Cost Management: Value Chain Analysis Approach. report SA, August 2007, 25-27. Porter, M. E. (1985). Competitive Advantage. The Free Press, New York, Ch. 1, pp 11-15. Newspaper Reports The Straits Times, October 19 2008, Money Section, SIA sees 1. 6% drop in flier numbers Other Reports Singapore Airlines Ltd Financial Report 2007-08 Singapore Airlines Ltd Financial Report 2006-07 Singapore Airlines Ltd Financial Report 2005-06\r\nSingapore Airlines Ltd Financial Report 2004-05 Cathay Pacific Financial Report 2007-2008 Qantas Airways Financ ial Report 2007-2008 Websites www. cathaypacific. com www. qantas. com. au www. reuters. com www. singaporeair. com http://business. timesonline. co. uk/tol/business/industry_sectors/banking_and_finance/article4909976. ece http://www. straitstimes. com/Breaking%2BNews/Money/Story/STIStory_288507. html www. venturerepublic. com/resources/Singapore_Airlines_¬_An_Excellent_Asian_Brand. asp www. singaporeairfreight. com/ttd_bizenterprise/Singlenews. aspx? DirID=64&re\r\n'