Singapore Airlines 2005 Annual Report Download - page 8

06 SIA Annual Report 04/05
Chairman’s Letter to Shareholders
The last year has been full of challenges
for the Singapore Airlines Group. The
aviation landscape in the Singapore
market has become intensely more
competitive, with many new entrants
starting operations. The price of jet
fuel – the most significant component
of cost in our industry – has risen
significantly. Our people have had to
respond to these and many other
changes occurring across the industry.
Given this backdrop, our financial
results for the year are most pleasing.
Our people deserve thanks and
commendation for this performance.
Demand driven by the post-SARS
recovery was stronger than many
would have anticipated this time a
year ago, and this led to good growth
in passenger and cargo traffic across
our network.
Our network grew during 2004-05,
with the addition of new cities in India:
Ahmedabad and Amritsar, and the
commencement of a non-stop service
to Cape Town. Frequencies also
increased to many well-established
destinations: Amsterdam, Shanghai,
Guangzhou, Melbourne, Brisbane,
Perth, Auckland, Mumbai, Kolkata,
Dacca, Ho Chi Minh City, Hanoi and
Surabaya.
The highlight, however, was the
commencement of daily non-stop
service between Singapore and New
York, in June 2004. Using our new
Airbus A340-500 ultra long-range
aircraft, this flight broke our own world
record, set the year before, for the
longest commercial non-stop flight.
Customers are responding positively
to the opportunity to travel between
Singapore and the USA non-stop.
LABOUR RELATIONS
I am pleased that the first half of the
year saw the resolution of most
outstanding matters involved in the
Collective Agreements with our five
unions. The negotiations were not easy
and the intensity of discussions
reflected the changes in the landscape
in which the Group operates. In the
end, the SIA spirit of doing what is
best for the Group prevailed. By year's
end, all Collective Agreements had
been finalised and signed.
In the past year, several functions
across the Group were outsourced.
These decisions were understandably
traumatic for those involved. However,
the commitment of management and
unions to collectively work together
to manage the change-over ensured
the outcome for all involved – including
the organisation – was a fair one.
We accept the ongoing need to
engage our employees and their
representatives in the changing nature
of our business. Some changes will
not be easy, and may involve the need
for painful decisions. The Group will
continue to make the right decisions,
in order to secure the best long-term
outcome for the majority of our people.
THE FUTURE
Singapore Airlines is responding
strongly to the challenges posed by
three new airlines operating from our
home base, and many established ones
from near and far. We will not surrender
market to them. We will fight vigorously
for business. We are re-engineering
our business to meet any challenge –
and any challenger – head-on.
There is no time to bask in the glow
of last year's good results. We must
look forward, to deal with the
challenges that remain, and those that
will emerge. That means re-designing
our business processes to be more
adaptable and customer-driven.
Responding to challenges is no
longer enough. We have to anticipate
them. Better yet, we intend to create
new ones of our own for the entire
industry. For our people, we need to
inculcate that sense of ceaseless
change in the way we do business.
That is what's required of a modern
industry leader.
It also requires developing a
sustainable business position through
careful cost management and
planning.
SIA has an enviable track record of
profitability in an industry that has
been chronically unprofitable.
Nevertheless, profitability becomes
even more important now as the
There is no time to bask in the glow of last year's good results. We must look
forward, to deal with the challenges that remain, and those that will emerge...
Responding to challenges is no longer enough. We have to anticipate them.
Better yet, we intend to create new ones of our own for the entire industry.
For our people, we need to inculcate that sense of ceaseless change in the
way we do business.