Never doubt PAP’s capability in destroying shareholder value whenever its ‘affiliates’ are appointed to top management in GLCs.. Never.
Whether its land, sea or air transportation, PAP never ceases to amaze with the achievements of ‘talented’ scholars and ex paper generals. To complete the circle after privatising fault-ridden SMRT and sinking NOL, loss-making Tiger Airways has now been privatised.
Tiger Airways has been incurring so much losses since listing that its shares were “technically worthless” by 2014.
Tiger was not a well-managed company and according to ST’s Aaron Low, “the signs of trouble were there from the very beginning, if investors had cared to look”. For once, our propaganda machine was upfront in “Tigerair’s bumpy flight from the start”:
Besides its “weak balance sheets, cash calls and key shareholders’ reduced stakes”, Tiger’s performance on the ground left much to be desired. (Singapore doesn’t have an airline ombudsman so we’ll have to make do with Australia’s)
In May 2015, Australia’s airline ombudsman declared Tigerair Australia the worst-performing airline – 3 years in a row – for topping the list of complaints on customer service, fund request, etc. Tigerair Australia was finally sold to Virgin Airlines – in another lelong sale – for $1 in 2014.
Last year, parent company SIA launched a general offer to integrate cash bleeding ‘kitten’ with Scoot in the hope that synergies will result in higher profitability. If its rich owner had not come to the rescue, poor ‘kitten’ would have bled to death.
Says Scoot CEO Campbell Wilson: “Not everyone can start a medium-to-long-haul low-cost carrier … You need to have the right hub, you need to have deep pockets, and you need to fly to the right places”.
Isn’t Campbell’s attitude similar to our scholars, ie throw massive amounts of money – similar to Temasek and GIC – in the hope of making money?
Will Scoot still be profitable after taking over Tiger’s losing business? It appears unlikely if the corporate culture at SIA doesn’t change.
Scoot doesn’t publish an annual report and it’s up to parent SIA to suka suka declare its profitability. To better understand Scoot, one only needs to take a look at the performance of its parent SIA.
SIA’s stagnant revenue would have meant lower profits, or likely losses, if not for the collapse in oil prices. In “SIA’s full-year net profit surges nearly 119% to $804 million”, almost all the net profit resulted from fuel savings, ie fuel costs fell from $5.3 billion to $4.5 billion in FY 2016. If oil prices had stayed above $80 per barrel, SIA would have incurred losses. So, was SIA profitability based merely on pure luck and not the talents of our scholars?
Is SIA really “A great way to fly”? Perhaps SIA’s overpaid gorillas still believe in their own propaganda. If flying on SIA were great, why isn’t revenue growing despite the huge increase in demand for air travel? Instead of focusing on how to make money in the quickest way, it should be looking at providing ‘a-great-way-to-fly’ service and allow travelers to decide if it is really that great.
Anecdotal evidence suggests its greatness is really doubtful. A relative used to be a premium traveler on SIA Business Class and took time to provide feedback on how to improve its service. But guess what? SIA wasn’t bothered! So how many such premium customers have been lost? How many lost customers have in turn encouraged fellow travelers to fly on their new found “A greater way to fly” airline?
If SIA continues to sleep, then it may soon fall out of the sky: the impossible sinking of our 48-year old NOL has already become a reality. SIA can’t continue to compete with a high cost structure, a top heavy management with bochap attitude and live in the ‘a great way to fly’ past.
The corporate culture at Scoot is no different from SIA. The thing about Scoot is, without transparency, we hardly know how profitable or badly-managed the company is.
Is Scoot as profitable as SIA claims or will Scoot turn into soot?