Beruflich Dokumente
Kultur Dokumente
Stan Li, Jessica Liu, Ben Mui, Edison Pei, Tony Yeung
Airlines
Provide air transport services for passengers or freight Categories of airline services include:
International National Regional Domestic
Major Issues
Weather Fuel Cost -14-16% of an airline's total costs Labor - 40% of an airline's expenses Other
Airport capacity, route structures, technology, and costs to lease or buy the physical aircraft
Availability of substitutes
Competitive rivalry
Government Regulations
Government has extensive regulation for economic, political, and safety concerns Some countries (e.g. US and Australia) have "deregulated" their airlines. The entry barriers for new airlines are lower in a deregulated market,
far greater competition average fares tend to drop 20% or more.
International Regulation
Groups (e.g. International Civil Aviation Organization) establish worldwide standards for safety and other vital concerns. Most international air traffic is regulated by bilateral agreements between countries.
Bilateral agreements are based on the "freedoms of the air In the 1990s, "open skies" agreements became more common
Financial risk
Variability of revenue and costs
Operational risk
Tactical aspects of running the business
Hazard risk
Safety of physical assets
Singapore Airline
Background
Public company since 1972 in Singapore Stock Exchange Wholly-owned subsidiary of the Singapore government through Temasek Hldgs (Pte) Its expanding route network covers 110 cities in 42 countries now. Having the fastest and youngest growing fleets.
Coverage
Competitive Advantage
The Group 2005-06 ROA ROE EPS (cents) 6.55% 9.29% 101.7 2004-05 7.38% 10.42% 111
Stock Information
Financial Risk
Market Risk
Jet fuel price risk Foreign currency risk Interest rate risk Market price risk
As at 31 March 2006, the composition of cash and bank balances held in foreign currencies by the Group is as follows: USD 21.8% (2005: 21.7%), EUR 13.6% (2005: 21.1%) and JPY 13.2% (2005: 13.3%). Cash at bank earns interest at floating rates based on daily bank deposit rates ranging from 1.38% to 4.71% (2004-05: 0.28% to 2.20%) per annum. Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group,
earn interests at the short-term deposit rates. The weighted average effective interest rate of short-term deposits is 3.6% (2004-05: 2.5%) per annum.
The Group owned $412.2 million (2005: $41.6 million) in quoted equity and non-equity investments at 31 March 2006.
Counterparty Risk
Surplus funds are invested in interestbearing bank deposits and other high quality short-term liquid investments. Counterparty risks are managed by limiting aggregated exposure on all outstanding financial instruments to any counterparty, taking into account its credit rating. Such counterparty exposures are regularly reviewed, and adjusted necessary. This mitigates the risk of material loss arising in the event of non-performance by counterparties.
Liquidity Risk
At 31 March 2006, the Group had cash and shortterm deposits amounting to $3,151.6 million (2005: $2,840.2 million). In addition, the Group had available short-term credit facilities of about $1,449.1 million (2005: $1,417.1 million). The Group also has Medium Term Note Programmes under which it may issue notes up to $1,500 million (2005: $1,500 million).
Under these Programmes, notes issued by the Company may have maturities as may be agreed with the relevant financial institutions, and notes issued by one of its subsidiary companies may have maturities between one month and ten years.
The Groups policies in this regard are in line with the funding policies of other major airlines.
SIA RMC
SIAEC RMC
SATS Group
RMC
SilkAir RMC
SIA Cargo
RMC
Other Subsidiary
RMC
Southwest Airline
Company profile
Southwest Airlines was founded in 1967 and is headquartered in Dallas, Texas. Southwest Airlines Co. provides scheduled air transportation services in the United States. As of December 31, 2006, the company operated 481 Boeing 737 aircrafts and provided service to 63 cities in 32 states. It also sells credit to business partners, including credit card companies, hotels, telecommunication companies, and car rental agencies.
Executives
Chairman HERBERT D. KELLEHER CEO GARY C. KELLY President and director COLLEEN C. BARRETT CFO LAURA WRIGHT
Routes Map
Competitors
AMR corporation Continental Airline, Inc. JetBlue Airways Corporation
South West
47%
Other Carriers
63%
Employee Proficiency
71 employees per aircraft Lowest ratio since 1972
Stock Performance
Stock Performance
Last Trade:15.00 Change: 0.02 (0.13%) Prev Close:14.98 Open:14.96 Day's Range:14.96 - 15.1052wk Range:14.56 - 18.20 Volume:6,448,400 Avg Vol (3m):7,768,670 Market Cap:11.83B P/E (ttm):24.75 EPS (ttm):0.61Div & Yield:0.02 (0.10%)
Income Statements
Risk Factor
From companys Annual Report:
Southwest's business is labor-intensive Southwest relies on technology to operate its business and any failure of these system could harm the Companys business Insurance cost increases or reductions in insurance coverage may adversely impact the Companys operation and financial results.
Disruptions to operations due to factors beyond Southwests control could adversely affect the Company.
Southwests low cost structure is one of its primary competitive advantages and many factors could affect the Companys ability to control its costs.
Risk Factor
Jet Fuel
Unpredictable price movement Unable to increase fares when fuel price rise Changes in hedging strategy and the effectiveness of hedging arrangement have significant impact on operating results
Purpose of Hedging
Airline operators are inherently dependent upon jet fuel to operate, and therefore, impacted by change in jet fuel prices
Jet fuel and oil consumed in 2005, 2004, and 2003 represented approximately 19.8%, 16.7%, and 15.2% of operating expenses respectively
The company endeavours to acquire jet fuel at the lowest possible cost
Performance of Hedging
Gains from hedging:
$890 million unrealized gain, as of December 31, 2005 Of that amount, $327 million are expected to be realized in 2006
Cost Structure
Operating Cost per Available Seat Mile (ASM)
Other 18% Depreciation and amrt 7% Landing fees 7% Aircraft rentals 2% Maintenance 6% Salaries 40%
Cost Control
To absorb the increasing in Jet Fuel cost, Southwest maintain its low cost characteristic through reduction in other operating expenses. Reduction in non-fuel unit costs of 1.5% Downsized work force and renegotiated collective bargaining and vendor agreements Headcount per aircraft decreased from 74 at Dec 2004 to 71 at Dec 2005
Options granted at the money 10 years terms Fully exercisable over 3, 5, or 10 years of continued employment
An options exercise price may be paid (i) in cash, (ii) in shares of Common Stock, (iii) through a cashless exercise, or (iv) in any other manner permitted by the committee.
Operating Lease
$385 million
6.5% senior
$375 million
6.5%
6.46%
5.496% Class
A-2 due 2006 $350 million
5.496 %
5.25%
6.73%
5.25% senior
unsecured notes due 2014.
(LIBOR) plus a margin every six months average floating rate In 2005 is
3.82%
a hypothetical ten percent change in those rates would correspondingly change the Company's net earnings and cash flows less than $2 million
The returns earned parallel closely with short-term floating interest rates
Credit risk
The Company does not expect any of the counterparties to fail to meet their obligations To manage credit risk:
selects and periodically reviews counterparties based on credit ratings limits its exposure to a single counterparty and monitors the market position of the program and its relative market position with each counterparty
The Company had agreements with seven counterparties containing early termination rights and/or bilateral collateral provisions whereby security is required if market risk exposure exceeds a specified threshold amount or credit ratings fall below certain levels.
held $950 million in fuel hedge related cash collateral deposits under these bilateral collateral provisions decrease, but not totally eliminate, the credit risk associated with the Company's hedging program
Insurance
Purpose of Insurance:
protect the Company and its property comply both with federal regulations and the Companys credit and lease agreements.
General Coverage:
public and passenger liability, property damage, cargo and baggage liability, loss or damage to aircraft, engines, and spare parts, and workers compensation.
Conclusion
THE END