Air Transport World

Freighted for success: SIA Cargo battles industry structure to stay profitable.(Cargo)(Singapore Airlines Cargo Private Ltd.)

"We have no God-given right to be profitable," declares Singapore Airlines Cargo President Hwang Teng Aun. "Bur we need a reasonable chance to achieve sustainable profitability in the volatile business we're in," the personable veteran SIA executive told ATW on the sidelines of a cargo symposium during Asian Aerospace 2004. Without a fundamental revision of the industry's legacy airfreight business model, that's not likely to happen, laments Hwang (see box, p. 53).

As it is, moneymaking SIA Cargo, ranked by IATA after FedEx as the second-largest international cargo carrier in terms of scheduled freight tons carried in 2002, isn't doing badly. It generated an operating profit of S$62.9 million ($36.7 million) in FY03 on total revenues of S$2.52 billion, compared to an operating loss of S$91 million for the previous year. After-tax profits reached S$66.6 million. Its roughly 23% revenue input contributed significantly to parent Singapore Airlines Ltd.'s net profit for the fiscal third quarter to Dec. 31, which more than doubled to $223.6 million owing to cost cuts, rebounding traffic and foreign-exchange gains.

Until July 2001, SLA Cargo was a division within SIA Group. Now it operates as a standalone entity with increased management accountability and operational transparency over a route network serving 58 cities in 33 countries on five continents. "Our focus now is more bottomline driven, and as a result there is also more focus on cargo matters at the senior management level of SIA," Freddy Khoo, VP-alliances and regional VP-West Asia/Africa, says. …

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