Singapore International Airlines

Contents COVER LETTER4 1PROSPECTS OF ECONOMY5 1. 1Global fiscal Crisis5 1. 2Oil Prices5 2PROSPECT OF AIRLINE INDUSTRY5 2. 1General Trend of the escape cock path attempt5 2. 2 compendium of combat of use6 3VALUE CHAIN7 3. 1Training of Pilots/ Cabin cabal/ Ground handling rung7 3. 2Branding and publicity7 3. 3Reservations and Ticketing7 3. 4Ground Ope proportionalityns7 3. 5In-flight Services8 3. 6 oxygenizecraft Operations8 3. 7Fleet counsel and master(prenominal)tenance8 3. 8Customers8 4SINGAPORE AIRLINES COMPETITIVE ADVANTAGE8 4. 1The 4 comp whiznts of SIAs competitive scheme8 5FINANCIAL STATEMENT ANALYSIS9 5. Operating transaction Analysis9 5. 2Liquidity Analysis10 5. 3Solvency Analysis10 5. 4Profit expertness Analysis10 5. 5Stock Prices Analysis11 5. 6Comgenus Parison with Industry average out11 6SINGAPORE AIRLINES NON-FINANCIAL PERFORMANCE11 6. 1L make headwaying and suppuration11 6. 3 Internal Processes12 7RECOMMENDATIONS12 8APPENDIX13 9REFERENCES32 Coer Letter To Ms Leo, chief run officer From Investment Team Subject Investment comprehend Sin hoo-hahore air ducts Ltd This stem controls an summary of capital of capital of capital of capital of capital of capital of Singapore Airlines Ltd (SIA) with response to your query on desirability of qualification a fairly long medium-to-long term investment in the sh bes of SIA.Firstly, an analysis of the prospects of the air passage championship manufacturing which SIA operates in would be presumption to develop a better understanding of the melodic line environment. The occurrent state of economy provide in whatever case be adept of the advancedlights as it is perhaps unrivalled of the biggest frights amongst investors. Next, the companions value chain and competitive strategies would overly be pre moveed and analyze to justify if SIA affirm the ability to sustain its growth despite numerous atomic summate 18na- across-the- hop on challenges such(prenominal) as the fisc al crisis and high oil prices.On top off of that, an analysis of the societys past financial statements and especially for the grade 2007/08 would be presented to analyze the internetability and grapheme of earnings. For a much holistic approach, analysis of the company and industry using non-financial performance measures would also be secernd to address issues where financial measures ar insufficiently informative. relations with the industry and main competitors allow also be made along the way to line of battle how they fare and if the stock price has the potential to grow amongst stiff challenger in the respiratory tract industry.Lastly, recommendations on the desirability of the investment would be given on our stand ground on our analysis. 1Prospects of frugality 1. 1Global Financial Crisis The human beings economy is currently facing one of the worst financial threats ever since the Great Depression in 1929. Demise of US confides such as Lehman Br anoth er(prenominal)s were delinquent to huge corporate debt default which caused them to incur a bear-sized impairment divergence. This tight belief crunch caused the downfall of the ball-shaped stock smirchet with fearful investors withdrawing their investments.In response to the gloomy scene of the worldwide economy, assurance was given by the G7 as they announce to disclose a 5- spotlight plan to counter the crisis and to stabilize the financial market. 1. 2Oil Prices The airway industry was drastically hit by the rocketing of aviation give the sack prices for the past one year , forcing galore(postnominal) companies to extend air ticket prices to cover the increase consumption. Expenditure is accelerating at a faster rate than revenue thusly this has caused many air lane companies to suffer a loss in operating profit. However, basket middling crude oil prices has been on a declining trend. Prices hide $18. 1/b or more(prenominal) than 14% in imperious, declining shr ewdly from the record levels reached in July, according to OPEC Monthly Oil Market delineate folk 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 rider demand, particularly in the First and origin disunitees, and the existent uncertain global economic scout. Cargo demand has also plummeted, with a 6. 5% drop curtain in demand for Asia-Pacific carriers in July 2008. However, SIA has been subject to anticipate changes and continue to break immature(a) grounds.The procurement of A380 Airbus has helped SIA achieve meaty cost savings. In addition, conversion of five Airbus A340-500 aircraft into an all(a)- patronage Class set-up, and eternally ensuring that potency best matches SIAs demand , arouse proved to be profi hedge for SIA alone despite the overall weakening passenger demand. 2. 2Analysis of combat of industry Since SIAs overall profitabilit y is largely influenced by the presence of competition, we have used Porters Model of Five Forces to analyze the competitiveness of the industry. Threats of substitutesOver the historic period, the airline industry has become change magnitudely competitive with instauration of raw(a) competitors such as budget airlines. As such, some passengers are choosing to fly budget airlines for short travelling distances. Hence, demand from customers are decent relatively price elastic, forcing some firms to minorer their prices in order to substantiation competitive. Buyer Bargaining military group Buyer bargaining power is increasing due to the price transparency concerns of customers, as they notify choose which airline to take. However, on the industry level, bargaining power is low. Supplier Bargaining coiffureSupplier bargaining power in the airline industry is high as the input required (aircraft, aviation fuel) is unique and there are no similar substitutes available. Rivalr y among existing players The intensity of competition among airlines has change magnitude substantially over the years as firms are narrowing the gap of the usefulness quality and on board amenities. This has led to increasing violence in effectual cost care for firms. Threat of Entry thither 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. many a(prenominal) firms have responded by buying servings in firms of budget airlines. 3Value compass 3. 1Training of Pilots/ Cabin crew/ Ground handling staff SIAs locates neat furiousness in tuition by continuously sending its employees for citywide and rigorous homework. To present simply the best service, SIA also imposes stringent pickax tests of employees at the recruitment stage. 3. 2Branding and publicity SIAs spending on advertising has been static over the recent years.Re cently, TBWA replaced Batey agency which popularised the iconic Singapore female child . SIA adopts a global approach to advertising in the external media, guardianship the Singapore fille icon as its representation of high quality service. 3. 3Reservations and Ticketing SIAs website allows flight epoch elude downloads for gadgets such as pocket PCs and palm excel 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 effects which includes luggage/ airfreight handling and apron service. Technology such as Internet check-in, biometric checks and downtown check-in services are ingrained to speed up disturb cartridge. The application of Fully Automated Seamless Travel (FAST) integrates three processes comp rising slope airline check-in, pre-immigration credential measure checks and immigration clearance.SIAs subjection customers also have the franchise of priority check-in and enjoying exclusive facilities at its lounges. 3. 5In-flight Services Its in-flight on-demand entertainment dodging has over a thousand demand options and office software for passengers. Also, SIA also integrated the full size space-bed, on-board email and internet services in its First and telephone circuit manikines. 3. 6Aircraft Operations SIA flies directly to 66 destinations and has tardily increased flights to more popular destinations. SIA has transformed its cabins to full product line line class toileting for its SG-NY flights and will be doing the same for its SG-LA Flights. . 7Fleet management and maintenance SIA maintains puppyish fleets of passenger and cargo planes. These fuel efficient planes are on the average age of 6- 7yrs. It leases 34 out of its 126 aircraft on an agreement of turn over 4. 7-10. 5 years with options to sub-lease. SIAEC has also joined Airbus Maintenance Training Network, large-minded it entrance to Airbus latest grooming methodologies. 3. 8Customers SIAs bendFlyer customer retention scheme has been effective to date and it now focuses on services for wealthy and business travellers, in conjunction with the PPS club . Singapore Airlines Competitive receipts Through the value chain equality with competitors, SIA has achieved both differentiation and low cost strategies in its operations and stands out as a loss leader in the industry. 4. 1The 4 components of SIAs competitive strategy 4. 1. 1Rigorous service design, evolution and continuous innovation SIAs service using department constantly researches for and tests out new innovations. It uses the modify innovation approach which involves three-step processes. The effective feed congest hold helps to ensure that any u seful suggestions are adopted.Employees are also sent on spy flights on competitors planes to newspaper publisher their findings . SIAs continuous innovation supports cost effectiveness and it transfers this margin to its customers. Some examples are improvements in tail end and screen size, as well as in-flight services, which compares favorably to its competitors . 4. 1. 2Profit and cost- scale downting mentality of employees SIAs employees are well aware of the implications of high cost and they always strive to achieve customer satisfaction in a cost effective manner. Compared to the industry, SIA maintains a relatively young yet fuel efficient fleet. 4. 1. 3Holistic Staff study altogether employees have a instruct and development plan which includes both operative and inter person-to-person skills. SIAs aircrew is organized in squads of 13 and flies together for at least 2 years . Hence, these have helped to develop team bonding for delivering elegant service. 4. 1. 4St rategic synergies through diversification and world-class infra anatomical structure SIA has reaped strategic synergies through diversification of its subsidiaries SIA Engineering beau monde, SATS, SATS In-flight catering and tiger airways. Diversifying has helped to avoid tough competition and to bewitch a larger market share by offering more types of services.Hence, SIA still gains the general market share through its 49% place in the low-cost carrier Tiger Airways while focusing on wealthy and business travellers, 5Financial Statement Analysis 5. 1Operating Performance Analysis receipts 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 positive degree and on an increasing trend. This tremendous improvement in operating profit is due the increased demand for SIAs flights. 5. 2Liquidity Analysis 5. 2. 1Quick d imension 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 quick ratio trend has been greater than 1. This indicates the relatively stronger fluidness position to equate current debts, especially compared with its competitors . 5. 3Solvency Analysis 5. 3. 1Debt-to- faithfulness Ratio The ratio dropped from 0. 12 in 2007 to 0. 11 in 2008. The result projects an optimistic outlook because the company was able to complete their purchase of new A380 planes without relying on remote bills 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 median(a) Equity Hageds lineages The return on average legality holders cash in hand dropped from 14. 9% in 2007 to 13. 56% in 2008. The major reason quarter the dimin ution was due to sale of SIA building and investment in Singapore Aircraft Leasing Enterprise Pte Ltd in 2007. The extra general events led to a significantly large amount of profit in 2007. Hence, the drop in return on average equity holders money is not a big concern.Compared to the 2006 enroll 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 after Tax per tract (diluted) This is a conservative measure that takes into floor of the employees exercising their share options. The diluted earnings after value 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 higher up. The drop is not a concern because it still shows an increasing trend. 5. 4. 3Dividends per ShareThe overall trend of the dividend payout is positive and investors are expected to receive a fair share of dividends annually . 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 simplification is due to rising fuel prices. In view 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 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, 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 regulate its sustainability amidst stiff competition. A comparison with their closer competitors is also be 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 radical also has sevener training schools to deliver training in each core functional areas. This includes the Transforming Customer Service (TCS) scuttle 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 sentry go of its customers on air and have introduced various new methods and equipment on board with the customers welfare and convenience in mind. SIAs efforts in providing excellent customer servic e are evident by the many awards and accolades they garnered over the past years. These awards have enhanced their reputation and enabled them to dominate in the Airline industry. 6. 3 Internal ProcessesSIAs Value Chain was examine 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 volatile 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 small 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 near SIAs growth prospects for the next 5 to 10 years and we herald that an attractive return can be guaranteed if the shares were bought. Ho wever, in view of the financial turmoil, we suggest putting the investment plan on hold jump and wait for share prices to plummet to a sufficiently low point before buying the shares. Ultimately, this will help our company to take proceeds of the low share price and maximize returns in the future. 8 addendum vermiform appendix 1 Article 1 From The TimesOctober 9, 2008 Interest rate cuts overshadowed by shadow of recession IMF says world is heading for major downturn Patrick Hosking, bank buildinging and Finance editor program 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 uncover 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 extra modal(a) level of coordination was designed to try out resolve in the face of financial panic but failed to prepare confidence in the stock market. Share prices rallied briefly in capital of the United Kingdom but the FTSE 100 index closed down 239 points at 4,367, its terminal point for four years. In its bleakest forecast for years, the International Monetary Fund said that the world was entering a major downturn in the face of the most dangerous shock . . . since the 1930s.The US and atomic number 63 were either on the brink of or already in recession. adjunct 2 Article 2 Home Breaking News notes Story Oct 11, 2008 G7 vows to fight crisis WASHINGTON GROUP of sevensome finance chiefs on Friday unveiled a five-point plan to fight the global economic firestorm and recruit 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 deplume to continue wor king together to stabilise financial markets and restore the string up of commendation, to support global economic growth, it added after the finance ministers and central bank chiefs from the G7 nations the United States, Germany, Japan, France, Britain, Italy and Canada met in Washington. auxiliary 3 Graph 1 Appendix 4 Newspaper Extract 1 The Straits Times, October 19 2008 notes Section Appendix 5 Exhibit 1 Airline Industrys Value Chain and competitive advantage The diagram down the stairs describes the Primary activities that is included in SIAs Value Chain Appendix 6 Article 3SIA stays the course with its branding 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 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 active advertising. More importantly, it is about the substance behind the brand. It perplexes me that people sound off the key to branding is advertising.Its not, he says. The key to branding is getting the basic principle of the business right low gear. Advertising is merely a way of communication 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 very high quality service, Mr Forshaw says. A significant application of biometric technologies currently being developed at SIAs hub at Changi airdrome 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 immigra tion clearance This initiative at Changi airdrome is a worlds first of integrate these processes with the clear objective of driving service excellence at aerodrome operations and SIAs ground services, while at the same time driving aptitude and improving security.. Appendix 7 Table 1 Kris Flyer Programs The table below describes the KrisFlyer programs of SIA. Level BenefitsYoung adventurer ClubEarn and redeem miles for free travel just bid other KrisFlyer members Miles earned go towards qualification for higher grades of membership Kris Flyer Elite cash25% bonus on effective miles flown whenever you fly Singapore Airlines, SilkAir or Virgin Atlantic. priority Reservation Waitlist and Priority Airport Standby Kris Flyer Elite Gold25% tier bonus on actual miles flown each time you credit the miles you earn on Singapore Airlines, SilkAir and Virgin Atlantic. Increased Check-in luggage Allowance (20kg, or one extra piece of baggage). Priority Airport Check-in and boarding and baggage handling Access to Star bond certificate Gold Lounges. PPS ClubExclusive Gift Vouchers to purchase items from our inflight shopping service, KrisShop. have a go at it 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 Class cannot be corroborate 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 shake for your spouse, who will be accorded the same leve l 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 SIA builds team spirit within its 6,600 crew members through its team concept, where small teams of 13 crew members are formed and indeed 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 printing press 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 wrong of screen size AirlineEconomy ClassBusiness ClassFirst ClassOthers Singapore Airlines10. 615. 4 LCD23 LCD (1280768 Pixels)100 movies, 180 TV shows, 20 communicate stations, 65g ames, 700 medicinal drug CDs, office software, sound cancelling headsets Cathay9 widescreen15 widescreen17 widescreen100 movies, 350 TV shows, 22 radio stations, 888 CDs, 70 interactive games, reverberate 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 seating area at once bed adaptable table height Dressing table with reverberate Plush duvet, fluffy pillows Ferragamo Toiletries Givenchy Sleeper Suite and suede slippers Power release entropy cancelling headsets- 198cm long flat bed Light meals/ snacks available anytime built in massage capability in each chair Payot paris toiletries Akira Isogawa pyjamas, eyeshades Power outlet ring cancelling headsets- 205. 7cm long, 63. 5cm wide flat bed ain Closet for clothes, hoes, mattress, pillows Extra large tray table inclination Lighting Adjustable reading light Built in massage capability in each chair Acca Kappa Amenities 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 and 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 skin care 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 A ge of Aircraft, 31 butt against 20082007-20082006-20072005 20062004 2005 SIA rider 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 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 Quick Ratio count Quick Ratio = Quick 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 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 debt 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. 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$ m illion 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 weighted average of ordinary shares in issue excluding treasury shares, change 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 adjustment 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- heavy average n umber 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 dividend (cents per share)20. 015. 010. 010. 0 Proposed last(a) 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 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 AverageQuick Ratio0. 921. 29 Interest Coverage0. 0426. 42 Return on Assets0. 19%8. 10% Return on Equity-0. 04%13. 60% Appendix 20 Tabl e 11 Non Financial Evaluation in the form of a BSC Learning and Growth Aspects of MeasurementMeasuresEvaluation Employee DevelopmentEmployee training programmes implemented execution 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 have been prioritised for follow-up action Pay and Benefits, move Development, and Working Relationships.This shows that they are concerned about its employees welfare, not just giving them financial satisfaction. Introduced a web-based self-learning security program for cabin and expert 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 variable 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 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 think (PSP), Restricted 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 account book 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 Ai rbus A380 cabin. Customer Overseas presenceNetwork DevelopmentAs of 31 butt on 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 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 acquisition is part of the Companys continuing effort to capture a larger slice of the global maintenance, repair and give-up the ghost (MRO) market by extending its reach o new growth markets and to reach out 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 import replenishment of the IATA Operational Safety Audit. The audit covered key op erating(a) areas across the Airline, including flight safety, 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 current flightsKrisShop launches new online sales portal krisshop. om, featuring an online catalogue and selections exclusive to Singapore ECONOMY menage 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. demarcation 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, t he seat is similar but slightly big, 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 warm on the A380 and B777-300ER, are also able to work. Inflight through a comprehensive cortege 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 rank in March 2008, Singapore Airlines has 120 Interline e-ticketing partners, among the highest in the industry. Corporate well-disposed ResponsibilityRaising money 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 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 coevals 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. I t 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 pauperisation 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 better Airline for the 17th consecutive 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(p) publication geared 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 year March 2008 Frost & Sullivan Asia Pacific Aerospace & Defence Awards (Asia) Airline of the YearBusiness Process Process efficiency 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 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 worlds 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 accept 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 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 Crew 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 exam aviation, aircraft and persona l 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 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 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 Diversity of businesses by tapping into budge t 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. lay down and maintain a good social image and reputation- Excellent in flight services on board with brand new progressive 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 set up the Board Safety reassessment Committee and Airline Safety Review Committee Safety problems have been an issue recently with numerous cases of technical problems and causing flight d elays. 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.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 compe titive 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.J. 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. Accounting SA, August 2007, 25-27. Porter, M. E. (1985). Competitive Advantage. The vacate 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. hypertext mark-up language www. venturerepublic. com/resources/Singapore_Airlines__An_Excellent_Asian_Brand. asp www. singaporeairfreight. com/ttd_bizenterprise/Singlenews. aspx? DirID=64&re