Singapore Airlines Harvard Case Solution & Analysis

Singapore Airlines Case Study Solution

Describe Singapore Airlines and its attitude toward transparency.

Singapore Airline is known as one of the best operating airline. It is also included under the heading of World’s top airlines. It offers flight destinations to over 62 countries including long hour’s flights such as New York, Los Angeles, Cape Town and Melbourne. It also offers most luxurious flights which costs US $16,200.

The services facilitated by Singapore Airline are known as the best services. Moreover, it is also awarded as “Word’s Best Cabin crew service” for 17 years. This award has increased the recognition of respective airline and helped the company to compete strongly in the industry.

The company has divided its budget in few parts such as 40% on training employees, 30% of increasing and revising its services and remaining 30% for innovating and creating new services for travelers. Using this budget allocation, the company announced first and earliest award winning entertainment system.

Singapore Airlines Harvard Case Solution & Analysis

The company has been operating its costs at the most minimum level comparing to its competitors. Such as Singapore Airline is costing 4.58 cents per available seat kilometer, on the other hand, competitors including European Airline was costing 8 to 16 cents and American Airline costing 7 to 8 cents.

Consequently, it has been analyzed that the dual strategy used by Singaporean Airlines, innovation strategy as well as cost effective strategy would help the company to sustain its profitability for a long term.

Analyze SIA’s financial statements

To make financial statement analysis of the country, five years historical data has been obtained from the case exhibits. Therefore, it has been analyzed that company’s revenue has been increasing over the 5 years. As it reached to 15,243 million in 2015 from 12,707.3 million in 2010. Moreover, the cost of company’s operation has also been increasing but from lesser rate than revenue as it reached to 14,891.9 in 2015.Consequently, gross profits have also been increasing. Due to the continuous fluctuations in company’s expenses, it managed to gain increased profitability over the years and finally reached to 359.5 million in 2015.

To make balance sheet analysis, it has been seen that company’s assets have been increasing over time along with increase in current assets and non-current assets. Moreover, the liability of the company has also increasing but with lesser rate than assets. Along with the assets, the equity of the company is also increasing from year to year. Consequently, it has been analyzed that company’s operations are getting efficient.

In order to make cash flow analysis, it has been analyzed that cash from operations has been fluctuating throughout the years, but it is has been analyzed that company manage to increase its cash flow operations and earned highest in 2014. Moreover, investing activities of the company have also been increasing. However there were some fluctuations in financing activities. As a result, the company managed to earn negative changes in net cash of the company. Which shows that company has been inefficient in order to manage its cash.

To make ratio analysis, the profitability of the company has been increasing overtime and reached its peak in the end of 2014. Moreover, share value of the company, as well as overall market value has also maximum in 2014.

Which theory of dividends does SIA seem to follow?

The dividend data of the company seems fluctuating over years and has not been constant. Moreover, the company is also giving ‘special dividend’ in two of the five years. Therefore, it has been analyzed that the company would be following the dividend policy of residual dividend payout in which it would be deciding for the dividend after deciding for the investment over the year. As if the project would be generating positive present value, company would be declaring the amount of dividend to be paid. Consequently, the dividend would be fluctuating form year over year.................

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