singapore journaux

Journaux de Singapore

REVIEW 200/SINGAPORE

High Flier

Singapore Airlines is buckling up to weather these turbulent times

By Trish Saywell/SINGAPORE

Issue cover-dated December 27, 2001 - January 3, 2002

THERE'S NO DOUBT ABOUT IT: 2001 was one of the worst years on record for the airline industry and Singapore Airlines was not immune to the global economic downturn. Air-traffic loads had already started falling steadily for all airlines, but things grew significantly worse following the September 11 terrorist attacks in the United States. In the first six months of the fiscal year ending March 2002, Singapore Airlines' operating profits dropped a year-on-year 35.9% to S$485 million ($265 million).

Like other airlines, SIA has had to adjust capacity to match demand and trim budgeted growth. In October, management agreed to take pay cuts of between 7% and 15% to contain costs and weather the recession. Other disappointments included the withdrawal of its bid in September for a stake in state-run Air-India due to political opposition to the privatization of the Indian national carrier.

Nonetheless, airline analysts still view SIA as the best airline stock in the current environment. And it was no surprise when Singapore's national icon turned in the best performance--as it has every year since the REVIEW 200 survey began in 1993. Once again it tops the most-respected list for Singapore. In fact, it is tops in every category but one--and there it's No. 2.

The airline has consistently fostered a premium brand image, with one of the strongest brand names in Asia outside Japan. It is also one of the region's best-run companies. It competes with the big Western airlines on flights to North America and Europe, has a strong balance sheet, a reputation for service and well-tested management. Don't forget its top score in the category of high-quality services and products. In August it unveiled its SpaceBed--a new Raffles Class, or business class, seat that reclines into a flat bed.

As far as financial soundness goes--where it ranked second--the airline did reasonably well before the global economic slowdown started to kick in during the second half of the year. Net profit for the fiscal year ended March 31 rose 33% to S$1.55 billion, compared with S$1.16 billion in the previous year. Revenue increased 10% to S$9.95 billion from S$9.02 billion. The earnings included S$440 million from the listing of SIA Engineering Co. and Singapore Airport Terminal Services. Operating profit at a group level, meanwhile, increased 15% to S$1.35 billion. The airline also earned S$166 million by leasing and trading aircraft.

THE COMPETITION
Move past SIA's stranglehold on the top position and you'll find Creative Technology, the multimedia firm that gave the world the Sound Blaster card and brought stereo sound to computers. It ranked second for the third year in a row in overall leadership and for the fourth year in succession as a company others try to emulate. It also retained its No. 2 spot for the third year running as a company innovative in customer needs.

True, it's been a victim, like so many other companies, of the global economic slowdown. It reported a net loss of S$73.4 million dollars in the June 2001 quarter. But it has remained a leader in digital entertainment products for the personal computer and the Internet, and is driving digital entertainment on the PC platform with products like its highly acclaimed Nomad Jukebox. Nomad Jukebox is a high-capacity portable music player that stores large volumes of music using the MP3 format that does not need tapes or CDs.

Notable mention should also be made of heavyweight Singapore Telecommunications, which moved up into third place for overall leadership from fifth last year. It also jumped two rankings into fourth spot for being innovative with customer needs and soared from eighth place to second in terms of having management with long-term vision.

It certainly was a seminal year for the telecoms giant as it completed the largest acquisition in Singapore's history--taking over Australia's second-largest telecoms company, Cable & Wireless Optus--for $7 billion. In November it also announced plans to shell out $602 million for a 22.3% stake in Telkomsel, Indonesia's No. 1 mobile-phone operator.