Singapore Airlines 2004 Annual Report Download - page 8

06 SIA Annual Report 03/04
Chairman’s Statement
We can look back on the past 12 months with pride, having
come through a difficult period with the full support of our staff,
and I thank them for their hard work and resilience.
When I wrote my statement for last year’s
annual report, the travel and tourism
industry in Southeast Asia was in turmoil
following the outbreak of SARS. The
outlook then was not only uncertain but
extremely worrying. My message focused
on the steps we had taken to control costs
in the weeks immediately after the outbreak
but was written before measures to reduce
labour costs were introduced. It is therefore
appropriate to begin this year’s message
by recognizing the understanding and
cooperation we received from unions and
staff, including those in the managerial
ranks, in bearing wage cuts and, in the
case of pilots and cabin crew, compulsory
unpaid leave.
In addition to reducing labour costs,
we took other steps to cut expenditure,
including the deferral or cancellation of
non-essential projects, freezing recruitment,
and reducing capacity or even suspending
services on a large number of routes. These
measures alone were not enough and
we had to reduce staff numbers through
our first major retrenchment exercise in
20 years.
Rebound in Demand
Fortunately, the crisis passed more quickly
than we dared hope. After a dire first
quarter, in which we incurred our first-ever
loss, the second quarter saw SARS brought
under control and Singapore removed from
the World Health Organization’s list of
affected countries. We did not expect the
rebound in demand for air travel to be so
immediate and so robust. Also, through
initiatives such as the Fabulous Offer and
Early Bird promotions, we enticed visitors
back to Singapore. Such was the pent-up
demand for travel that in the second
quarter, we nearly recovered the losses of
the first, despite the bargain-basement
fares. Three months earlier, this would have
been unimaginable.
Profits were announced in the third
and fourth quarters, resulting in a year-
end profit attributable to shareholders of
$849 million.
In view of our performance, our staff
were repaid the salary lost through wage
cuts and, because we topped $600 million
in profit attributable to shareholders,
deservedly received a further 15 per cent
on top. Thus, they ended the year with
more compensation than they would have
otherwise earned. In addition, they will
be paid a bonus of 2.05 months of basic
salary, in accordance with the agreement
on profit sharing bonus.
Arrival of Airbus A340-500s
Another inspiring development in the last
quarter of the year was the arrival of our
first three Airbus A340-500s in January
2004, followed by the launch of non-stop
services between Singapore and Los Angeles
using this sleek ultra-long-range aircraft.
Designed primarily for the business traveller
who needs to keep intermediate stops and
overall travel time to a minimum, the A340-
500 comes equipped with a more spacious
Raffles Class and a new Executive Economy
Class that features more leg room and
wider seats. To allow passengers to move
around freely and stretch their legs, the
aisles are wider than on other SIA aircraft,
and the unique conversation corners with
snack counters have proven to be extremely
popular. The first outbound flight, aided
by tailwinds, completed the journey in
16 hours, but the return sector was
completed in just under 181/2 hours,
which established a record for the longest
non-stop commercial flight. This record
will soon be broken, as we shall be
launching an even longer non-stop flight,
in terms of distance, when we introduce
a daily non-stop service to New York
(Newark) at the end of June 2004.
Labour Relations
Labour relations issues received considerable
media attention in the last quarter, but we
are optimistic that these issues are behind
us. Management and the five SIA staff
unions have expressed a commitment to
work together to restructure wages and
medical benefits, both important to the
long-term viability of the Airline and
continued employment wellbeing of our