Singapore Airlines - $SIA.SP

What’s Singapore Airlines Business Model?

Singapore Airlines Limited provides air transportation, engineering, pilot training, air charter, and tour wholesaling services. The Company’s airline operation covers Asia, Europe, the Americas, southwest Pacific, and Africa.

What Singapore Airlines is doing in more details?

Singapore Airlines (SIA) is a global company dedicated to providing air transportation services of the highest quality, and to maximizing returns for the benefit of its shareholders and employees.

It flies to some 60 destinations around the globe, primarily in the Asia/Pacific region but also in Europe and North America. It boasts a fleet of about 170 aircraft.

SIA extends its network via code-sharing with fellow members of the Star Alliance marketing partnership, including Lufthansa and Air China. The company was founded in 1972. The East Asia, accounts for the majority of the company’s revenue.

Where Singapore Airlines is Operating?

Besides its main passenger transportation business, the management has determined that the company has the following reportable segments: Singapore Airlines (about 80% of total sales), SIAEC (some 10%), Budget Aviation (around 5%), and SilkAir (less than 5%).

The Singapore Airlines segment provides passenger and cargo air transportation under the Singapore Airlines brand with a focus on full-service passenger segment serving short and long haul markets.

SIAEC segment is in the business of providing airframe maintenance and overhaul services, line maintenance, technical ground handling services and fleet management.

It also manufactures aircraft cabin equipment, refurbishes aircraft galleys, provides technical and non-technical handling services and repair and overhaul of hydro-mechanical aircraft equipment.

The Budget Aviation segment provides passenger air transportation under the Scoot brand with a focus on the lowcost passenger segment. The SilkAir segment provides passenger air transportation under the SilkAir brand with a focus on full-service passenger segment serving regional markets.

The airline also offers maintenance, repair, and engineering services to other airlines through its SIA Engineering unit.

Where is the geographical reach of Singapore Airlines?

SIA is based in Singapore. Its East Asia operations account for around 60% of sales, while Europe accounts for some 15%. The South West Pacific and non-scheduled services and incidental revenue account for about 10% each, while Westa Asia and Africa, as well as the Americas, account for the rest.

In general, Singapore Airlines, SilkAir and Scoot fly to some 60 destinations around the globe.

What is Singapore Airlines’ Sales and Marketing Strategy?

SIA sells certain tickets with connecting flights with one or more segments operated by its other airline partners. For segments operated by its other airline partners, the company has determined that it is acting as an agent on behalf of other airlines.

The company’s advertising expenses were S$12.6 million, and S$334.2 million in 2021, and 2020.

What is Singapore Airlines Financial Performance?

The company’s revenue for fiscal 2021 decreased by 76% to $3.8 billion from $16.0 billion in fiscal 2020 due to lower passenger flown revenue across the three passenger airlines within the company.

The company’s net loss for the year widened $4.1 billion to $4.3 billion. This was mainly driven by the weaker operating performance as well as noncash impairment charges, partially offset by higher tax credit.

Cash held by the company at the end of fiscal 2021 increased to $7.8 billion. Cash provided by financing activities was $9.7 billion while operating and investing activities used $3.3 billion and $1.3 billion, respectively.

What is Singapore Airlines Future Strategy?

SIA continues to adopt a portfolio strategy, in which it has investments in both full-service and low-cost airlines. The integration of SilkAir’s narrow-body operations with Singapore Airlines began with the first SIA Boeing 737-800 NG aircraft deployed to Phuket on 4 March 2021.

The integration will deliver greater economies of scale for the Group, and enhance the flexibility of aircraft deployment to meet the demand for air travel as it returns.

A multi-hub strategy allows the SIA Group to extend its reach and tap on new traffic flows by investing in airlines outside of Singapore. The investment in Vistara enables the Group to have a presence in India.

While international operations planned under Air Travel Bubble arrangements are being pursued, Vistara’s domestic operations have resumed to 70% of pre-Covid-19 capacity in March 2021. In the same month, the airline also achieved a 65% passenger load factor.

Vistara’s fleet growth plans remain on track, recording 47 aircraft as of 31 March 2021, and the airline is expecting the number to increase to 70 by mid-2023.

SIA continues to actively pursue new engines of revenue growth, as well as initiatives to achieve a more competitive cost base.

What is Singapore Airlines’ Background?

In 1972, Malaysia-Singapore Airlines (MSA) separates into two airlines, Malaysian Airline System, and Singapore Airlines. In 1991, Personal satellite-based phones onboard allow passengers to stay in touch with people on the ground while they’re in the air.

In 2001, KrisWorld is the first to provide audio- and video-on-demand to all passengers in all classes, starting October.

What is Singapore Airlines’ History?

Singapore Airlines (SIA) was formed as Malayan Airways in 1937 but did not begin scheduled service until 1947, when the Mansfield & Co. shipping line used it to link Singapore with other Malayan cities.

The airline added service to Vietnam, Sumatra, and Java by 1951 and opened routes to Brunei, Burma (now called Myanmar), and Thailand by 1958.

Meanwhile, British Overseas Airways Corporation (BOAC, predecessor of British Airways) bought 10% of Malayan Airways in 1948 and raised its stake to 30% in 1959. Australia’s Qantas Airways also took a 30% stake in Malayan Airways that year.

In 1963 the governments of Singapore, Malaya, Sarawak, and Sabah merged to form Malaysia, inspiring Malayan Airways to change its name to Malaysian Airways.

Singapore seceded from the federation in 1965 but joined Malaysia to buy control of the airline from BOAC and Qantas in 1966, changing the name to Malaysia-Singapore Airlines.

The carrier extended service to Bombay, London, Melbourne, and Rome in 1971 and then to Athens, Frankfurt, Osaka, and Zurich in 1972. That year managerial disagreements led Malaysia and Singapore to dissolve the company to form two separate national airlines: The domestic network went to the Malaysian Airline System, and international routes went to SIA.

Joe Pillay of Singapore’s ministry of finance became SIA’s first chairman. The government owned 82% and employees held 17%.

SIA initiated such now well-known amenities like free drinks, hot towels, and headsets in 1972, thereby gaining a reputation for outstanding service. By 1974 it served 25 cities worldwide.

It added flights to Auckland and Paris in 1976, Tehran and Copenhagen in 1977, and San Francisco, its first US destination, in 1978.

In 1985 the government reduced its stake in SIA to 63%. The company joined Cathay Pacific and Thai Airways International in 1988 to form Abacus, a computer reservation system for Asia/Pacific carriers.

The next year SIA bought stakes in Delta Air Lines and Swissair; the three created a route network reaching 82 countries. In 1995 SIA ordered 77 Boeing 777s for delivery between 1997 and 2004.

The US and Singapore governments signed an “open skies” agreement in 1997 (the first between the US and an Asian nation), allowing unlimited flights between the two countries, but SIA canceled its alliance with Delta and Swissair in favor of one with Germany’s Lufthansa.

A December 1997 crash of a new SilkAir 737 killed all 104 people on board; investigators speculated that the crash was an act of suicide by the pilot. (Two years later SIA agreed to pay settlements of up to $195,000 to each family.)

The Asian financial crisis added to the airline’s woes, but SIA was able to cut costs when the government reduced contributions to the national pension plan and the Singapore airport lowered landing fees.

In 1999 SIA implemented code-sharing with SAS, and soon announced it would join SAS in the global Star Alliance marketing network.

After failed attempts to buy into South African Airways and Ansett Australia, SIA bought a 49% stake in UK carrier Virgin Atlantic for some $960 million, acquired 25% of Air New Zealand (reduced to 7% in 2001), and joined the Star Alliance in 2000.

Also that year 82 passengers died when a Singapore Airlines flight crashed into debris on an out-of-service runway. SIA repositioned SIA Cargo as a standalone subsidiary in 2001. Later in the year SIA Cargo formed an alliance with Lufthansa Cargo, SAS, and Deutsche Post.

In the airline industry downturn that followed the September 11, 2001, attacks on the US, SIA was forced to tighten its belt. By the next year, however, nearly all of the service that the carrier had suspended was restored.

The airline trimmed its schedule and cut jobs in 2003 because of decreased demand for air travel to Asia, which stemmed in part from fears of the SARS virus. SIA sold its remaining stake in Air New Zealand in 2004.

In 2007 the carrier made history with its flight from Singapore to Sydney using the Airbus A380, marking the first commercial flight with the world’s largest passenger plane.

In September 2009 SIA shed its 81% stake in Singapore Airport Terminal Services (which provided catering, security, and cargo handling to SIA and other airlines) to focus on core airline and engineering operations.

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