Singapore International Airlines

Contents COVER LETTER4 1PROSPECTS OF ECONOMY5 1. 1Global pecuniary Crisis5 1. 2Oil Prices5 2PROSPECT OF AIRLINE INDUSTRY5 2. 1General disposition of the airway Industry5 2. 2 analytic thinking of competitiveness of diligence6 3VALUE CHAIN7 3. 1Training of Pilots/ confine crew/ Ground handling round7 3. 2Branding and publicity7 3. 3Reservations and Ticketing7 3. 4Ground Operations7 3. 5In- escape cock dish ups8 3. 6Aircraft Operations8 3. 7Fleet Management and maintenance8 3. 8 customers8 4capital of capital of Singapore AIRLINES competitory ADVANTAGE8 4. 1The 4 comp wholenessnts of SIAs competitive st outrankgy8 5FINANCIAL STATEMENT ANALYSIS9 5. Operating Performance Analysis9 5. 2Liquidity Analysis10 5. 3Solvency Analysis10 5. 4 attainability Analysis10 5. 5Stock Prices Analysis11 5. 6 similarity with Industry modal(a)11 6SINGAPORE AIRLINES NON-FINANCIAL PERFORMANCE11 6. 1L holding and out increase11 6. 3 Internal Processes12 7RECOMMENDATIONS12 8APPENDIX13 9REFERENCES32 r achis Letter To Ms Leo, CEO From Investment Team Subject Investment embrace expectant of capital of capital of capital of Singapore Airlines Ltd This sketch contains an analysis of Singapore Airlines Ltd (SIA) with response to your query on desirability of making a fairly considerable medium-to-long term investment in the sh ars of SIA. for the beginning agely, an analysis of the prospects of the respiratory tract industry which SIA operates in would be stipulation to surface a bankrupt understanding of the melodic line environment. The current state of economy will overly be one of the highlights as it is perhaps one of the biggest concerns amongst investors. Next, the associations value chain and competitive strategies would too be presented and analyzed to justify if SIA defend the ability to sustain its appendage despite numerous world- abundant ch wholeenges much(prenominal) as the pecuniary crisis and high oil determines.On top of that, an analysis of the guilds quondam(prenominal) financial statements and especially for the year 2007/08 would be presented to analyze the deriveability and tone of compensation. For a more(prenominal) holistic approach, analysis of the family 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 counseling to show how they fare and if the stock price has the potential to grow amongst stiff contestation in the air hose industry.Lastly, recommendations on the desirability of the investment would be given on our stand based on our analysis. 1Prospects of parsimoniousness 1. 1Global Financial Crisis The worlds 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 referable to huge incorporated debt default which caused them to incur a large impairment sacking. This tight credit crunch caused the downfall of the ball-shaped 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 business business industry was drastically hit by the rocketing of aviation fuel prices for the past one year , forcing legion(predicate) companies to increase air book prices to cover the change magnitude expenditure. Expenditure is accelerating at a faster rate than revenue hence this has caused m some(prenominal) airline companies to suffer a loss in operating profit. However, field goal fairish crude oil prices has been on a declining trend. Prices fell $18. 1/b or more than 14% in overbearing, declining sharply from the record aims reached in July, according to OPEC Monthly Oil Market Repo rt September 2008. 2Prospect of Airline Industry 2. 1General Trend of the Airline Industry The current event in the airline industry remains bleak. It is caused by a mix of weakening passenger withdraw, p artistic creationicularly in the First and traffic Classes, and the existing uncertain global stinting outlook. Cargo demand has also plummeted, with a 6. 5% drop in demand for Asia-Pacific carriers in July 2008. However, SIA has been able to anticipate changes and continue to break crude grounds.The procural of A380 Airbus has helped SIA achieve veritable price savings. In addition, conversion of five Airbus A340- d aircraft into an All-Business Class set-up, and constantly ensuring that capacity top hat matches SIAs demand , stimulate proved to be profitable for SIA alone despite the overall weakening passenger demand. 2. 2Analysis of competitiveness of industry Since SIAs overall profitability is largely influenced by the presence of competition, we make believe used P orters Model of Five Forces to analyze the competitiveness of the industry. Threats of substitutesOver the years, the airline industry has become increasely competitive with entry of new competitors such as cypher airlines. As such, just about passengers are choosing to fly budget airlines for short travelling distances. Hence, demand from guests are becoming relatively price elastic, forcing some firms to get down their prices in order to stay competitive. Buyer Bar come alonging Power Buyer dicker power is increasing due to the price transparency concerns of customers, as they can involve which airline to take. However, on the industry level, bargaining power is low. Supplier Bargaining PowerSupplier bargaining power in the airline industry is high as the input required (aircraft, aviation fuel) is unique and there are no similar substitutes available. Rivalry among existing players The intensity of competition among airlines has increased substantially over the years as fir ms are narrowing the gap of the receipts quality and on board amenities. This has led to increasing emphasis in effective cost circumspection for firms. Threat of Entry There are substantial barriers to entry for the industry due to the high initial fixed outlay and proprietary know-how.However, the entry of budget airlines poses potential threats to the existing players. umpteen firms have responded by buying shares in firms of budget airlines. 3Value Chain 3. 1Training of Pilots/ Cabin crew/ Ground handling staff SIAs places great emphasis in gear uping by continuously sending its employees for comprehensive and rigorous instruction. To present only the outperform service, SIA also imposes stringent excerption tests of employees at the recruitment stage. 3. 2Branding and publicity SIAs spending on advertising has been static over the new-fangled years.Recently, TBWA replaced Batey agency which popularised the iconic Singapore Girl . SIA adopts a global approach to adverti sing in the global media, keeping the Singapore Girl icon as its representation of high quality service. 3. 3Reservations and Ticketing SIAs website allows flight timetable downloads for gadgets such as pocket PCs and palm tops and synchronizes the data when it is amended. SIAs ticketing offices are located in over 70 countries and it operates 24 hour telephone reservations and service call centres to help its customers.The use of interline e-ticketing allows ticket information to be stored in SIAs secured database and shared among airlines on the customers itinerary. 3. 4Ground Operations SATS handles all ground works which admits baggage/ airfreight handling and apron work. Technology such as Internet check-in, biometric checks and downtown check-in services are ingrained to speed up processing time. The application of Fully automatise Seamless belong ( betting) integrates three processes comprising airline check-in, pre-immigration security checks and immigration dynamic headroom.SIAs verity customers also have the privilege of priority check-in and enjoying exclusive facilities at its lounges. 3. 5In-flight Services Its in-flight on-demand diversion system has over a thousand demand options and office software for passengers. Also, SIA also integrated the full coat space-bed, on-board email and cyberspace services in its First and Business classes. 3. 6Aircraft Operations SIA flies disciplinely to 66 destinations and has recently increased flights to more popular destinations. SIA has trans organise its confines to full business class shadowering for its SG-NY flights and will be doing the akin for its SG-LA Flights. . 7Fleet Management and maintenance SIA maintains young surpasss of passenger and cargo skims. These fuel efficient planes are on the intermediate 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 conjugated Airbus Maintenance Training Ne devilrk, giving it access to Airbus latest training methodologies. 3. 8Customers SIAs crinkleFlyer customer retention dodging has been effective to date and it now focuses on services for wealthy and business travellers, in conjunction with the PPS confederacy . Singapore Airlines Competitive Advantage Through the value chain comparison with competitors, SIA has achieved twain differentiation and low cost strategies in its operations and stands out as a leader in the industry. 4. 1The 4 components of SIAs competitive strategy 4. 1. 1Rigorous service design, development and continuous innovation SIAs service development department constantly researches for and tests out new innovations. It uses the centralized innovation approach which involves three-step processes. The effective feedback convey helps to ensure that any useful suggestions are adopted.Employees are also sent on spy flights on competitors planes to report their findings . SIAs continuous innovation supports cost effectiveness and it transfers this margin to its customers. many examples are approachs in seat and screen size, as well as in-flight services, which compares favourably to its competitors . 4. 1. 2 pay and cost- fadedting mentality of employees SIAs employees are well aware of the implications of high costs and they always strive to achieve customer comfort in a cost effective manner. Compared to the industry, SIA maintains a relatively young yet fuel efficient fleet. 4. 1. 3Holistic Staff DevelopmentAll employees have a training and development plan which includes both available and social skills. SIAs aircrew is organized in teams of 13 and flies together for at least 2 years . Hence, these have helped to develop team bonding for delivering excellent service. 4. 1. 4Strategic synergies through diversification and initiatory infrastructure SIA has reaped strategic synergies through diversification of its subsidiaries SIA Engineering attach to, SATS, SATS In-flight catering and Tiger airways. Diversifying has helped to avoid tough competition and to capture a big market share by pass more types of services.Hence, SIA still gains the full cosmopolitan market share through its 49% stake in the low-cost carrier Tiger Airways spell focusing on wealthy and business travellers, 5Financial Statement Analysis 5. 1Operating Performance Analysis Revenue from the companys 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 dictatorial and on an increasing trend. This tremendous emendment in operating profit is due the increased demand for SIAs flights. 5. 2Liquidity Analysis 5. 2. 1Quick Ratio The ratio dropped from 1. 4 in 2007 to 1. 29 in 2008. This is largely due to the company recognizing more sales in advance of carriage under current liabilities. However, the overall ready(a) ratio trend has been greater than 1. This indicates the relatively stronger liquidity position to meet 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 in 2008. The result projects an sanguine outlook because the company was able to complete their purchase of new A380 planes without relying on outside funds and the value of the ratio is lower than its competitors.This indicates SIAs strong ability to generate cash from operating activities for future growth. 5. 4Profitability Analysis 5. 4. 1Return on Average Equity Holders Funds The harvest-tide on average paleness holders funds dropped from 14. 9% in 2007 to 13. 56% in 2008. The major reason behind the decrease was due to sale of SIA building and investment in Singapore Aircraft Leasing Enterprise Pte Ltd in 2007. The extraordinary events led to a significantly large amount of profit in 2007. Hence, the drop in return on average equity holders funds is not a big concern.Compared to the 2006 figure of 9. 61% and 2005 figure of 11. 01%, the company has been more successful in generating returns for its equity holders. 5. 4. 2Earnings subsequently tax per allot (diluted) This is a conservative measure that takes into account of the employees exercising their share options. The diluted authoriseings 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 above. The drop is not a concern because it still shows an increasing trend. 5. 4. 3Dividends per parcel outThe overall trend of the dividend payout is positive and investors are expected to receive a fair share of dividends each year . 5. 5Stock Prices Analysis The general price trend of SIA stocks shows an upwards inclination. It reached a peak at around November 07 and prices have been decreasing since. One of the reasons why stock prices started to decrease is due to rising fuel prices. In cerebration of the recent financial turmoil, the unstable economy is expected to have a significant impact on stock price. As compared to its major competitors, the stock price decrease was fortunately not as drastic.Also, we should office 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, SIAs financial performance is above industry average in comparison. 6Singapore Airlines Non-Financial Performance Non-financial performances are an integral part of a company which is bound to affect a companys financial position in the long run and will determine its sustainability amidst stiff competition. A comparison with their closer competitors is also beingness considered . 6. 1Learning and GrowthSIA 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 Group also has seven training schools to deliver training in each core functional areas. This includes the Transforming Customer Service (TCS) initiative and general management training. Furthermore, SIA has in place share-based remuneration programmes which aim to more directly align the interests of senior management with the interests of shareholders. . 2Customer perspective One of SIAs strengths lies in its superior customer service and excellent facilities on board. On top of that, SIA also places large emphasis on the gumshoe of its customers on air and have introduced sundry(a) new methods and equipment on board with the customers welfare and convenience in mind. SIAs childbeds in providing excellent customer service are evident by the many awards and accolades they garnered over the past years. These awards have enhanced their character and enabled them to dominate in the Airline industry. 6. 3 Internal ProcessesSIAs Value Chain was an alyzed to gain better understanding of its internal process. 7Recommendations From the above analysis, we understand that the airline industry that SIA operates in is extremely volatilizable and competitive. Coupled with the problem of rising fuel prices, the future do poses many challenges for SIA. However, having analyzed SIAs strategies and operation style, we can see that SIA has been effective in managing the challenges faced to date, despite it being a relatively di whole steped and young airline compared to the other players in the industry.This is evident from the good financial performance of SIA. Thus, our team is optimistic about SIAs growth prospects for the next 5 to 10 years and we predict that an attractive 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 sooner buying the shares. Ultimately, this will h elp our company to take expediency of the low share price and maximise returns in the future. 8 concomitant cecal appendage 1 denomination 1 From The TimesOctober 9, 2008 Interest rate skims overshadowed by spook of recession IMF says world is heading for major downturn Patrick Hosking, Banking and Finance Editor Interest rates across 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.The extraordinary level of coordination was designed to demonstrate resoluteness in the face of financial panic but failed to restore arrogance in the stock market. Share prices rallied briefly in London but the FTSE 100 index closed down 239 points at 4,367, its wors t point for four years. In its bleakest forecast for years, the International Monetary Fund said that the world was accounting entry a major downturn in the face of the most dangerous shock . . . since the 1930s.The US and Europe were either on the brink of or already in recession. cecal appendage 2 Article 2 Home Breaking News Money Story Oct 11, 2008 G7 vows to fight crisis WASHINGTON GROUP of seven-spot 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 send to continue working together to stabilise financial markets and restore the flow of credit, to support global economic growth, it added after the finance ministers and central bank chiefs from the G7 nations the United States, Germany, Japan, Franc e, Britain, Italy and Canada met in Washington. extension 3 Graph 1 accessory 4 Newspaper Extract 1 The Straits Times, October 19 2008 Money Section Appendix 5 Exhibit 1 Airline Industrys Value Chain and competitive advantage The diagram to a lower place describes the Primary activities that is included in SIAs Value Chain Appendix 6 Article 3SIA stays the course with its stigmatization strategy American advertising agency 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 neediness 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 about advertising. More importantly, it is about the substance behind the brand. It perplexes me that people think the find to branding is advertising.Its not, he says. The key to branding is getting the fundamentals of the business right first. Advertising is merely a way of communicating between the organisation 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 real high quality service, Mr Forshaw says. A significant application of biometric technologies currently being developed at SIAs hub at Changi aerodrome in Singapore is the FAST (Fully Automated Seamless Travel) process.In November 2004, a six-month pilot test of FAST has been initiated based on a biometrics technology that integrates three processes airline check-in, pre-immigration security checks, and immigration clearance This initiative at Changi Airport is a worlds first of integrating these processes with the clear object glass of driving service honesty at airport operations and SIAs ground services, while at the same time driving dexterity an d improving security.. Appendix 7 Table 1 crease Flyer Programs The table below describes the KrisFlyer programs of SIA. Level BenefitsYoung Explorer ClubEarn and redeem miles for reposition travel just like other KrisFlyer members Miles earned go towards qualification for higher tiers of membership Kris Flyer Elite Silver25% bonus on actual miles flown whenever you fly Singapore Airlines, SilkAir or Virgin Atlantic. Priority Reservation Waitlist and Priority Airport Standby Kris Flyer Elite funds25% tier bonus on actual miles flown each time you credit the miles you earn on Singapore Airlines, SilkAir and Virgin Atlantic. Increased Check-in Baggage Allowance (20kg, or one extra tack together of baggage). Priority Airport Check-in and boarding and baggage handling Access to Star Alliance specie Lounges. PPS ClubExclusive Gift Vouchers to purchase items from our inflight shopping service, KrisShop. Enjoy reduced or waived fees for various KrisFlyer services. Travel Assistance a nd 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 give/Business Class cannot be confirmed immediately, you will be offered the option of a guaranteed seat in Economy Class on the same flight. 100% increased check-in baggage allowance on all Singapore Airlines and SilkAir flights Extended Use 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 will be accorded the same level of service as you whenever they travel. Appendix 9 Article 5 Cost-effective service excellence lessons from Singapore Airlines An additional source of intelligence is SIAs spy flights, where advisors travel with competitors and report on their offerings SI A builds team spirit within its 6,600 crew members through its team concept, where small teams of 13 crew members are formed and then fly together as far as possible for at least two years. This leads to the development of team spirit and social bonds within the team that reinforces the culture of cost-effective service excellence and the peer pressure to deliver SIAs promise to customers. Appendix 10 Table 2The tables below show the comparison between the in-flight facilities provided by SIA and their competitors. Airline comparison in terms of screen size AirlineEconomy ClassBusiness ClassFirst ClassOthers Singapore Airlines10. 615. 4 LCD23 LCD (1280768 Pixels)100 movies, 180 TV shows, 20 radio stations, 65games, 700music CDs, office software, disturbance cancelling headsets Cathay9 widescreen15 widescreen17 widescreen100 movies, 350 TV shows, 22 radio stations, 888 CDs, 70 interactive games, noise cancelling headsets Qantas6. 310. 28. 360 movies, 200 TV shows, 20 radio stations, 10 games, 150 music CDs, noise cancelling headsetsAirlines comparison in terms of in-flight services AirlineSingapore AirlinesQantasCathay 1st Class- 88. 9cm wide, fine grain leather seats Flat bed adjustable table height Dressing table with mirror Plush duvet, fluffy pillows Ferragamo Toiletries Givenchy Sleeper Suite and suede leather slippers Power outlet to-do cancelling headsets- 198cm long flat bed illuminate meals/ snacks available anytime build in massage capability in each curb Payot paris toiletries Akira Isogawa pyjamas, eyeshades Power outlet Noise cancelling headsets- 205. 7cm long, 63. 5cm wide flat bed Personal Closet for clothes, hoes, mattress, pillows Extra large tray table belief Lighting adjustable reading light Built in massage capability in each chair Acca Kappa comforts set Power outlet Noise cancelling headsets Business Class- 1-2-1 layout with 76cm width seats Flat bed Light duvet, large pillows Computer usage with USB ports a nd keyboard Business lounge Snack corner Eau de toiletries Power Outlet 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 Inflight bar Marc Newson amenities kit withKorner skincare crossway 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 4Operating Performance of Company The CompanyCathay Qantas in S$ million 200820072006200520082008 Revenue1 2,759. 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 region 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 Quick Ratio Calculation Quick Ratio = Quick Assets/ topical 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 Section 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 d ebt and equity in the capital structure and measures the degree to which the company relies on outsider for funds.Debt-to-Equity Ratio = Total long-term liabilities/ Total stockholders equity The GroupCathayQantas in S$ million 200820072006200520082008 Long-term 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. one hundred twenty. 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 per share (diluted) is computed by dividing profit attributable to equity holders of the Company by the leaden average of ordinary shares in issue excluding treasury shares, adjusted for the dilutive effect on the exercise of all outstanding share options.The Group 2008200720062005 Profit attributable to equity holders of the Company(S$ millions)2,049. 402,128. 801,240. 701,352. 40 revision for dilutive potential ordinary shares (S$ millions) (5. 10) (4. 80) (3. 60)- Adjusted net profit attributable to equity holders of the Company (S$ millions)2,044. 302,124. 001,237. 10- Weighted 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 (ce nts)166. 1170. 8101. 3111. 0 Appendix 17 Table 9 Dividend Schedule The Group 2008200720062005 Interim dividend (cents per share)20. 015. 010. 010. 0 Proposed final dividend (cents per share)80. 035. 035. 030. 0 Dividend cover (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 meekest 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 AverageQuick 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 competencie s, it allows staff to identify strengths and opportunities for improvement. Three areas have been prioritised for follow-up action Pay and Benefits, Career Development, and Working Relationships.This shows that they are touch on about its employees welfare, not just giving them financial satisfaction. Introduced a web-based self-learning security program for cabin and good aircrew. Seven training schools Employee satisfactionEmployee benefits schemes Short-Term Incentives Short-term incentives generally take the form of an annual profit-sharing bonus. Payment of the versatile bonus is based on employees achieving the target levels in the following (i) SIA Groups Return on Shareholders Fund (ii) SIA Companys Operating Profit Margin and iii) SIA Companys Passenger ladle 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 project (PSP), Restric ted Share Plan (RSP) and Employee Share Option Plan (ESOP). InnovationNew technology and innovationsKrisWorld, 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.There is also an extensive selection of video 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 DevelopmentAs of 31 March 2008, Singapore Airlines operated 726 weekly flights to 66 destinations in 36 countries.Including codeshare services with Star Alliance and partner airlines, the Airlines global route network grew to 149 de stinations 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 acquisition is part of the Companys continuing effort to capture a larger slice of the global maintenance, repair and overhaul (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.SafetySafety measures introducedIntroduced a web-based self-learning security program for cabin and technical aircrew. It also successfully completed its aid renewal of the IATA Operational Safety Audit. The audit cover key operational areas across the Airline, including flight pencil eraser, emergency management, engineering maintenance and ground handling. The Airline is also working closely with other safety organisations, such as IATA and AAPA, to promote and enhance flight safety. Service rangeNew services improvements to cur rent flightsKrisShop launches new online sales portal krisshop. om, featuring an online catalogue and selections exclusive to Singapore ECONOMY divide Improved design and use of light, thinner 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.At 85-cm wide, the seat is similar but slightly bigger, than the Business Class seats fitted on the Airlines Boeing 777-300ER fleet. Business Class on the A380 also features a Passenger Corner, specially created for these customers to pick 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.Singapore Airlines customers flying 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 Airlines sales channels were e-tickets. All Singapore Airlines stations in the network are e-ticket enabled.According to IATA ranking in March 2008, Singapore Airlines has 120 Interline e-ticketing partners, among the highest in the industry. Corporate Social Respon sibilityRaising money for charities Over $1. 9 million was elevated and distributed to charities in Sydney, Singapore and the global humanitarian organisation, Medecins Sans Frontieres. Singapore Airlines announces it will auction off seats in the worlds 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.EnvironmentThe A380 is a cleaner, greener, new generation aircraft fuel burn, 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 help 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 traveller Asia-Pacific scoop up Airline for the 17th consecutive time in its 2008 Readers Poll. crush Asia-Pacific Airline, vanquish First Class Best Business Class and Best Economy Class. With ten editions worldwide, Business Traveller is the worlds leading publication gear towards frequent business travellers. Worlds Best Awards 2008 survey Best International Airline for the 13th consecutive time in its. The magazine has a readership of almost five million. February 2008 Air Transport World (Global) Airline of the form March 2008 Frost & Sullivan Asia Pacific Aerospace & Defence Awards (Asia) Airline of the YearBusiness Process Process susceptibility Solutions to improve business efficiency Introduction of A380 to cater to high demand from customers and also attempted to cut costs that was passed on from high oil prices since the use of bigger airplanes will be more cost e fficient 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 worlds largest doer 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 maturation demand for air travel. This shows that they continually increase their frequency to meet demands and improve services towards customers. Employee EfficiencyValue added per employeeThere 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 CompetitorsSIACathay PacificQantas Learning & GrowthAir faction training -4 month long training for stewarde sses 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, emergency 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 f uel costs. renewal of businesses by tapping into budget airline Tiger Airways. Average fleet age of 6. 41 years-Cost cutting solutions to improve business efficiency by publicly 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 focused on cost cutting such that safety is being compromised, and they are currently under supervision by CASA -Average flight age of 9. 3 years transformation of businesses by tapping into budget airline and currently holds stakes in Jetstar. Customer Perspective- Close relationship and builds loyalty through branding. Excellent in flight entertainment on board that is crucial for longer flights. Low safety concern Introduced a web-based self-learning security program for cabin and technical aircrew and has completed 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 realise 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 Board Safety look backward Committee and Airline Safety Review Committee Safety problems have been an issue recently with numerous cases of technical problems and causing flight delays. The well-behaved Aviation Safety Authority (CASA) told Qantas to improve the maintenance of its planes, after several flights had been cancelled or retard 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.The 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 daybook Articles Shank, K.J. and Govindarajan, V. (1992). Strategic Cost Manag ement and the Value Chain. Journal of Cost Management, Winter 1992, 5(4)5-21 Chivaka, R. (2007). Strategic Cost Management Value Chain Analysis Approach. Accounting 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 2005-06Singapore Airlines Ltd Financial Report 2004-05 Cathay Pacific Financial Report 2007-2008 Qantas Airways Financial 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