Singapore International Airlines

Topics: Singapore Airlines, Airline, Qantas Pages: 25 (6939 words) Published: March 11, 2010
1.1Global Financial Crisis5
1.2Oil Prices5
2.1General Trend of the Airline Industry5
2.2Analysis of competitiveness of industry6
3.1Training of Pilots/ Cabin crew/ Ground handling staff7
3.2Branding and publicity7
3.3Reservations and Ticketing7
3.4Ground Operations7
3.5In-flight Services8
3.6Aircraft Operations8
3.7Fleet Management and maintenance8
4.1The 4 components of SIA’s competitive strategy8
5.1Operating Performance Analysis9
5.2Liquidity Analysis10
5.3Solvency Analysis10
5.4Profitability Analysis10
5.5Stock Prices Analysis11
5.6Comparison with Industry Average11
6.1Learning and Growth11
6.3 Internal Processes12

Cover Letter
To: Ms Leo, CEO
From: Investment Team
Subject: Investment Report – Singapore Airlines Ltd
This report contains an analysis of Singapore Airlines Ltd (SIA) with response to your query on desirability of making a fairly large medium-to-long term investment in the shares of SIA. Firstly, an analysis of the prospects of the airline industry which SIA operates in would be given to develop a better understanding of the business environment. The current state of economy will also be one of the highlights as it is perhaps one of the biggest concerns amongst investors. Next, the company’s value chain and competitive strategies would also be presented and analyzed to justify if SIA have the ability to sustain its growth despite numerous world-wide challenges such as the financial crisis and high oil prices. On top of that, an analysis of the company’s past financial statements and especially for the year 2007/08 would be presented to analyze the profitability and quality of earnings. For a more holistic approach, analysis of the company and industry using non-financial performance measures would also be used to address issues where financial measures are insufficiently informative. Comparisons with the industry and main competitors will also be made along the way to show how they fare and if the stock price has the potential to grow amongst stiff competition in the airline industry. Lastly, recommendations on the desirability of the investment would be given on our stand based on our analysis.

1Prospects of Economy
1.1Global Financial Crisis
The world’s economy is currently facing one of the worst financial threats ever since the Great Depression in 1929. Demise of US banks such as Lehman Brothers were due to huge corporate debt default which caused them to incur a large impairment loss. This tight credit crunch caused the downfall of the global stock market with fearful investors withdrawing their investments. In response to the gloomy outlook of the worldwide economy, assurance was given by the G7 as they announce to unveil a 5-point plan to counter the crisis and to stabilize the financial market. 1.2Oil Prices

The airline industry was drastically hit by the rocketing of aviation fuel prices for the past one year , forcing many companies to increase air ticket prices to cover the increased expenditure. Expenditure is accelerating at a faster rate than revenue; hence this has caused many airline companies to suffer a loss in operating profit. However, basket average crude oil prices has been on a declining trend. “Prices fell $18.81/b or more than 14% in August, declining sharply from the record levels reached in July,” according to OPEC Monthly Oil Market Report September 2008. 2Prospect of Airline 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 passenger demand, particularly in the First and Business Classes, and...

References: 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)
Chivaka, R. (2007). Strategic Cost Management: Value Chain Analysis Approach. Accounting SA, August 2007, 25-27.
Porter, M
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