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 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% for increasing and revising its services and remaining 30% for innovating and creating new services for travelers. Using this budget allocation, the company announced the first and earliest award winning entertainment system.

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

Singapore Airlines Harvard Case Solution & Analysis

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

It has been analyzed that it is possible to predict dividend payment of different airlines, but Singapore Airline’s dividend cannot be predicted as it does not expose its financial information. Specifically, dividend information is not shown by the company publicly due to which, company’s dividend history cannot be gathered. It determines that company has not been transparent and does not like to expose its information.

Analyze SIA’s financial statements

In order to analyze financial status of the company, five years’ historical data of company’s financial statements have been obtained from the case exhibits. Therefore, it has been analyzed that company’s revenue has been increasing over the 5 years. It has 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.

It has been analyzed 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 is also increasing but with lesser rate than assets. Along with the assets, the equity of the company is also increasing year by year. So, it has been analyzed that company’s operations are getting efficient.

To analyze cash flow of the company, the cash generated from operations has been fluctuating throughout the years, but it has been analyzed that company has managed to increase its cash flow operations and it earned the 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. This 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 are also maximum in 2014.

Which theory of dividends does SIA seem to follow?

The dividend data of the company seems fluctuating over the 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 dividend investment over the year. And if the project would be generating positive present value, company would declare the amount of dividend to be paid..................

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