Singapore Airlines 2009 Annual Report Download - page 8
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6
CHAIRMAN’S LETTER TO SHAREHOLDERS
As I refl ect on the past year, I am
left to wonder whether Charles
Dickens, in his Tale of Two Cities,
really could foresee how 2008-09
was going to be, when he wrote,
“It was the best of times, it was the
worst of times”.
We started the year posting very
good results for the preceding
year. Demand remained strong
throughout the fi rst half of the
year, despite continued high
fuel prices.
Then, at the half-way point, the
world was confronted by major
shocks to the global fi nancial
system, causing the collapse
of once-invincible institutions.
Many leading, iconic corporations
required government-assisted
life support.
Demand fell sharply, across all
cabin classes. So too did the
price of jet fuel. This has led, and
will lead, to some losses on our
pre-purchased fuel hedges in the
short term, but Singapore Airlines
always adheres to a prudent –
some even say conservative –
strategy on fuel hedging. So what
we lose on those hedges, we
can offset with gains against our
budget price for fuel that we did
not hedge, as the price falls.
In the current climate, we can look
at some fundamental principles to
which the Company has adhered
throughout its history, and know
those commitments put us in a
stronger position than almost all of
our competitors.
First, our reliance on living within
our means, not exposing ourselves
to any meaningful leveI of debt,
ensures we have suffi cient reserves
to help cushion the business at
times like these.
Second, we have always resisted
the temptation to opportunistically
gamble heavily on fuel and
currency hedges, preferring a
consistent approach through
We are already aggressively pursuing
business with more dynamic pricing,
exceptional value-added packages
and promotions designed to
recognise our loyal customers.
good times and bad. This means
our hedging losses in the short
term, while there, will be much
less than those of some of our
more adventurous competitors.
Going into 2009-10, the Group will
work hard to contain costs. With a
reduction in fl ying capacity during
the next year, we have already
taken steps to reduce the size
of the operating fl eet, which will
bring costs down quickly. There
are diffi cult fl ow-on effects of these
decisions: we are addressing our
surplus staffi ng capacity through
measures that spread the sacrifi ce
across the many, and in doing so,
ensuring retrenchment becomes a
measure of last resort.