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  • #16
    And voila ... the reason for the cost-cutting: $138 million in the red for Q1. Will have to wait till tomorrow for the detailed analysis.

    http://www.straitstimes.com/business...million-for-q4

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    • #17
      Originally posted by CarbonMan View Post
      And voila ... the reason for the cost-cutting: $138 million in the red for Q1. Will have to wait till tomorrow for the detailed analysis.
      I think the $138M loss might be from the announcement:
      SIA Cargo's provision for competition-related matters (-$132 million) and absence of refund of a fine last year (-$117 million) further added to the headwinds.

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      • #18
        More details coming out:

        Singapore Airlines will get rid of four Airbus 380 superjumbos in its fleet, but will take delivery of three new A-380s in the current financial year which ends on March 31, 2018.

        By then, the airline will have a total of 109 aircraft, three more than in the last financial year.
        The weak earnings were due mainly to "intense competition" which continues to exert pressure on yields amidst persistent cost pressures, SIA said on Thursday.

        This is especially so in the premium sector which continues to account for a significant portion of the group's revenues, even as steps are being taken to grow Scoot and Tigerair - the group's budget arms.
        The airline faces a challenging operating environment, SIA said.

        This has pushed fares and yields down.

        Still, the many strategic initiatives implemented to address structural changes in the industry are now showing positive results.

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        • #19
          Surprised to see SIA is in the red and more so as the oil prices have drop fromt he heady days of USD140 to presently about $50 and last year was marginally just below $50 too. SIA must relook into its routes and see which are the ones that are not so profitable and or if its concentrating too much on the front end ie first class/suites which may not be doing well for some time due to the world economy for a few years now. Interestingly in the SIA statement t mentioned that the effeiciency will improve when all the efficient ordered aircrafts are being delivered, but at the same time it seems that SIA is holding on and keeping its 14 to 15 year old 772s in service and used mainly for regional routes with more cycles which are not efficient for these 772s as they are built for longer range services and are therefore heavier and with higher engine thrusts for such regional flights ofsome which are 2 hours only. SIA should have extend the leases of their A333s instead by a few years instead of returning them and using the heavier 772s.
          Last edited by flyguy; 19 May 2017, 11:37 AM.

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          • #20
            According to the Straits Times:

            A new Transformation Office that has been set up, for example, is aimed at identifying new revenue-generation opportunities and reshaping the business into one that continues to deliver high-quality products and services, though with a significantly improved cost base and higher levels of efficiency, SIA said.

            ----------------------
            Wonder what this new revenue generation opportunities will be about? It's probably better than cutbacks.

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            • #21
              In many ways I'm not so surprised it's currently a bit flat. They've made some aggressive moves to fight the Middle Eastern airlines by introducing more flights to more destinations in Europe and the US, and these flights are selling well even though they are less than 12 months into operation. It stands to reason that they filled them with cheaper tickets, thus lowering yield. What it has achieved though is getting more people to experience their product and tell their friends and family.

              They've also added more Australian and SE Asian flights to allow more people to get to SIN to connect to these new destinations. It may be costing them at the moment, but people are starting to talk about Singapore Airlines again. They need a loyal customer base who encourage their friends and family to fly SQ to brace themselves against the competition from CX and Chinese airlines.

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              • #22
                I'd be terribly wary of quoting a newspaper article for results analysis. Journalists typically don't have a good understanding of financial concepts. [Disclosure: As part of my job, I explain complex (and sometimes simple) financial statement matters to financial journalists.]

                I looked through SQ's results announcement:
                http://infopub.sgx.com/FileOpen/sgxa...&FileID=454407
                http://infopub.sgx.com/FileOpen/nr-q...&FileID=454408

                Might be easier to look at the slides:
                http://infopub.sgx.com/FileOpen/slid...&FileID=454409
                http://infopub.sgx.com/FileOpen/anal...&FileID=454484

                Few points:
                1) I wouldn't read too much into the results of one specific quarter - there tends to be too much short term variables in it. The only thing that stands out in the last quarter is the high staff costs - don't know if this is a one-time issue (bonus, etc) or something longer term.
                2) SQ faces really tough yield environment (slide 5). This is a structural issue that will continue to depress performance for some time to come.
                3) All else being equal, if fuel costs stay at levels seen in the 1st quarter of this calendar year, SQ will barely make any money this year.

                Yield enhancement is the Holy Grail, but its going to be really tough to do much in such a competitive environment.

                Look at the bright side: Unless you're an SQ shareholder, you should actually be happy about low yields. What it means is that on average, you're getting cheaper tickets.

                Honestly, I feel that ex-Singapore prices (generally, not just with SQ) have come down quite a bit. We as a family are traveling a lot more the last 18 months compared to before. For the June school holidays, we paid only ~S$800pp for tickets to OSL on TG. Domestic flights on SK and DY were also ridiculously cheap, allowing us pay for proper accommodation, as opposed to the type of places where you need to bring your own towels and sheets. But I digress...

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                • #23
                  We can expect some of the newly opened routes to be cut. I hope they also start looking into disposing their ageing 777 fleet, iam not sure which brainchild decided to hold onto these birds rather than extending the A330 leases.

                  Originally posted by SQ228 View Post
                  They've also added more Australian and SE Asian flights to allow more people to get to SIN to connect to these new destinations. It may be costing them at the moment, but people are starting to talk about Singapore Airlines again. They need a loyal customer base who encourage their friends and family to fly SQ to brace themselves against the competition from CX and Chinese airlines.
                  They cannot built up loyal customer base with the prices they still maintain out of SIN.
                  Good example: SIN-ICN rt in Y: SQ 1.900 SGD, KE 900 SGD, OZ 1.400 SGD
                  Singaporeans and Expats are not willing to pay such a premium to fly with their home airline. For this price you can fly to Europe on SQ.

                  On the other hand i have managed to secure the cheapest ever tickets out of SIN to Europe for the past 18 years. The price is finally coming down to the range you would expect to pay for the same ticket out of europe.

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                  • #24
                    Originally posted by SQ025 View Post
                    They cannot built up loyal customer base with the prices they still maintain out of SIN.
                    Good example: SIN-ICN rt in Y: SQ 1.900 SGD, KE 900 SGD, OZ 1.400 SGD
                    Singaporeans and Expats are not willing to pay such a premium to fly with their home airline. For this price you can fly to Europe on SQ.

                    On the other hand i have managed to secure the cheapest ever tickets out of SIN to Europe for the past 18 years. The price is finally coming down to the range you would expect to pay for the same ticket out of europe.

                    Agreed. I just booked SIN-HKG for the end of August and paid S$400 for exactly the same flights, same seats, same fare class and everything as I took last week and booked three months ago at S$525.

                    It is crazy that I can fly TG in J to Korea for the same price as SQ in Y with my trip tomorrow night being ~S$1600 in J on TG. SQ wanted something like S$1400-1500 in Y when I checked last month. I believe SQ would get a more support out of SIN if they gave us similar promotions/fares, as you've said, that are seen ex-EU.

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                    • #25
                      Here's the full transcript of the results briefing:

                      https://www.singaporeair.com/saar5/p...t-q4fy1617.pdf

                      No questions on the dysfunctional website! Shocking!!

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                      • #26
                        More Mergers?

                        I know that Scoot and Tiger are already merging, but between having SQ as a full service airline and TigerScoot, what really is the point of maintaining Silkair as a separate operation and brand?

                        Case in point - two weeks ago I flew SIN to Phuket on a Silkair flight, which left about ten minutes after a Tiger flight. The Silkair flight was less than half full, and I'm guessing the Tiger flight was also, so merging schedules would make a lot of sense.

                        It would also mean that SQ for example could fly to Phuket with say an 77W on Friday evenings, when the flight would be full, rather than being constrained to A320's on Tiger / Silkair.

                        Lastly the fare I paid on Silkair was really reasonable, and much more in line with what I would have expected to pay on Tiger. Do they really want subsidiary airlines competing with each other on scheduling and price?

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                        • #27
                          Originally posted by Saltwater View Post
                          I know that Scoot and Tiger are already merging, but between having SQ as a full service airline and TigerScoot, what really is the point of maintaining Silkair as a separate operation and brand?

                          Case in point - two weeks ago I flew SIN to Phuket on a Silkair flight, which left about ten minutes after a Tiger flight. The Silkair flight was less than half full, and I'm guessing the Tiger flight was also, so merging schedules would make a lot of sense.

                          It would also mean that SQ for example could fly to Phuket with say an 77W on Friday evenings, when the flight would be full, rather than being constrained to A320's on Tiger / Silkair.

                          Lastly the fare I paid on Silkair was really reasonable, and much more in line with what I would have expected to pay on Tiger. Do they really want subsidiary airlines competing with each other on scheduling and price?
                          I guess part of the problem here is that MI provides a lot of regional connections to SQ passengers, and given most international J passengers are already fairly unimpressed with what MI has to offer, they would draw the line at being put on a budget carrier to connect with their international long haul. There's also the question of transfers between terminals and the respective fees charged by different terminals based on services delivered. Moving all TigerScoot flights out of budget terminals would be rather expensive, but moving MI passengers to a budget terminal would making connecting too difficult for SQ premium passengers and Y passengers alike.

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                          • #28
                            Originally posted by SQ228 View Post
                            I guess part of the problem here is that MI provides a lot of regional connections to SQ passengers, and given most international J passengers are already fairly unimpressed with what MI has to offer, they would draw the line at being put on a budget carrier to connect with their international long haul. There's also the question of transfers between terminals and the respective fees charged by different terminals based on services delivered. Moving all TigerScoot flights out of budget terminals would be rather expensive, but moving MI passengers to a budget terminal would making connecting too difficult for SQ premium passengers and Y passengers alike.
                            Presently MI, Scoot and Tiger are all conveniently housed in the same T2 terminal. And suppose there would be some cannibalization of economy passengers from SQ to Scoot for flights to the same cities that both operate like SYD, MEL, BKK, TPE etc which could result in the lower yield for SQ.

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                            • #29
                              Originally posted by flyguy View Post
                              Presently MI, Scoot and Tiger are all conveniently housed in the same T2 terminal. And suppose there would be some cannibalization of economy passengers from SQ to Scoot for flights to the same cities that both operate like SYD, MEL, BKK, TPE etc which could result in the lower yield for SQ.
                              Even though Scoot and SQ might operate flights to the same destination or region, they each have a specific clientele to cater to. The former for the budget and money conscious traveler, while the latter for the business travelers and passengers who prefer a more premium offering. So I think there is negligible cannibalization of passengers from SQ. In fact, by offering Scoot as an option, the SQ company stands to gain more by capturing a previously un-entered market.

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                              • #30
                                Originally posted by flyguy View Post
                                Presently MI, Scoot and Tiger are all conveniently housed in the same T2 terminal. And suppose there would be some cannibalization of economy passengers from SQ to Scoot for flights to the same cities that both operate like SYD, MEL, BKK, TPE etc which could result in the lower yield for SQ.
                                The cannibalisation is due to the product mix, like the Group must have knowingly absorbed it knowing that overall it would be able to capture more profitable target markets. I think it wouldn't work if say, a lot fewer Singaporeans didn't have relatively strong and/or blind loyalty to SQ.

                                Also, CX's recent financial performance is a lot worse...

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