Singapore Airlines’ CEO Goh Choon Phong should be at a loss for words. Days after collecting the prestigious Skytrax’s World Best Airline Award for the fourth time, the CEO must be watching in horror as SIA share price plunged by as much as 5.5% on 27 July 2018, presumably due to the poor Q1FY18/19 financial results.
The poor financial results came on the back of announcements of integration of SIA Cargo and SilkAir into parent airline and merger of Tiger Airways and Scoot. Despite the extensive restructuring exercise among its subsidiaries, it certainly seems that there was not much improvement in resource synergies, revenue growth or even cost reduction. What a wasted effort indeed!
As the saying goes, one man’s poison is another’s meat. While oil and gas companies like Keppel and Sembcorp had been struggling in the aftermath of the oil price’s collapse, SIA share price had been flying high, surging from $9.80 in early 2017 to as high as $11.56 in May this year. But the magical form of SIA share price is as good as it gets as recent uptick in crude oil prices returned to haunt the premium airline.
The reason for the gravity defying performance of SIA share price was because of low fuel cost in 2017. Fuel is always the highest expense component for the airlines. And SIA is no different. As there is no index for jet fuel, the price is directly pegged to crude oil. Therefore, rising crude oil price would inevitably hurt SIA’s bottom-line.
But what riled investors was really the much touted [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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