Singapore Airlines 2009 Annual Report Download - page 185

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35 Contingent Liabilities (in $ million) (continued)
(d) Australian travel agents’ representative actions
A former Australian travel agent, Leonie’s Travel Pty Limited, fi led a representative action in the Federal
Court of Australia (New South Wales District Registry) on 15 December 2006 naming seven respondents
[International Air Transport Association (“IATA”), Qantas Airways Limited, British Airways plc, Air New
Zealand Limited, Singapore Airlines, Malaysian Airline System Berhad, and Cathay Pacifi c Airways
Limited] in a claim on behalf of Australian travel agents for alleged non-payment of commissions on
fuel surcharges applied to passenger tickets issued in Australia from May 2004 onwards. IATA was
subsequently removed from the proceedings.
In May 2007, the applicant’s solicitors fi led a fresh similar representative application on behalf of
Paxtours International Travel Pty Ltd, another Australian travel agent, against Cathay Pacifi c Airways
Limited and the Company. The Company denies the claims and, along with each of the named airlines,
is defending the actions.
The court delivered its judgment in the claim against another airline on 30 March 2009. There are no
substantive developments in the claim against the Company.
36 Financial Risk Management Objectives and Policies (in $ million)
The Group operates globally and generates revenue in various currencies. The Group’s airline operations
carry certain fi nancial and commodity risks, including the effects of changes in jet fuel prices, foreign
currency exchange rates, interest rates and the market value of its investments. The Group’s overall risk
management approach is to moderate the effects of such volatility on its fi nancial performance. The Group’s
policy is to use derivatives to hedge specifi c exposures.
As derivatives are used for the purpose of risk management, they do not expose the Group to market risk
because gains and losses on the derivatives offset losses and gains on the matching asset, liability, revenues
or costs being hedged. Moreover, counterparty credit risk is generally restricted to any hedging gain from
time to time, and not the principal amount hedged. Therefore the possibility of a material loss arising in the
event of non-performance by a counterparty is considered to be unlikely.
Financial risk management policies are periodically reviewed and approved by the Board Executive
Committee (“BEC”).
(a) Jet fuel price risk
The Group’s earnings are affected by changes in the price of jet fuel. The Group’s strategy for managing
the risk on fuel price, as defi ned by BEC, aims to provide the Group with protection against sudden
and signifi cant increases in jet fuel prices. In meeting these objectives, the fuel risk management
programme allows for the judicious use of approved instruments such as swaps and options with
approved counterparties and within approved credit limits.