Table of Contents 1. Introduction 4 2. Executive Summary 5 3. Financial Analysis 5 3.1. Profitability 5 3.2. Analysis of Investment Performance 13 3.3. Financial Condition 17 3.4. Dividend Policy 22 4. Conclusion 26 5. References 27 Introduction The analysis supplied within this report has been undertaken from the perspective of a current shareholder in Singapore Airlines (SIA). The report provides critical assessment of the company's overall performance, assessment that would be relevant and meaningful to shareholders. Two major airlines have been selected to provide competitor comparison throughout this report. The two competitor airlines - Japan Airlines Ltd and Qantas Airways - have been selected …show more content…
Although we see a decrease in fuel, staff and depreciation costs, all other expenses experienced an increase for the reporting period. Vertical Analysis of Income Statement (in $ million) | 2013/14 | % | 2012/13 | % | Total revenue | 15,243.9 | 100 | 15,098.2 | 100 | Total op expense | 14,984.6 | 98 | 14,869.0 | 98 | Depreciation | 1,575.5 | 10 | 1,589.1 | 10 | Staff cost | 2,336.7 | 15 | 2,353.3 | 15 | Fuel costs | 5,702.1 | 37 | 5,899.4 | 39 | Handling charges | 1,038.7 | .07 | 1,006.1 | .07 | Advertising and sales costs | 257.6 | .02 | 209.3 | .01 | Rentals on leased aircraft | 649.5 | .04 | 553.6 | .03 | Other expenses | 3,424.5 | 37.87 | 3,258.2 | 35.89 | By using the vertical analysis method as shown above we see the individual operating expense as a proportion of total revenue for the reporting period. This give greater clarity to the significance the various expense items mean to the airline and its reliance on these expenses to be controlled. We can see from the analysis there is consistency across reporting periods for these significant expenses, with decease in fuel costs. From the above statistical data (horizontal and vertical) we can delve deeper into the financial profitability of the airline by the use of profitability ratios. As with any ratio calculation its value or benefit comes
There will now be a look at the profitability aspect of Qantas airways operations. The following ratios have been selected for the last two most recent years of 2015 and 2016 these are the Gross profit margin, return on equity (ROE), and Return on Assets (ROA). The Ability to make profits and secure returns for investments are key indicators of a company’s financial viability (Birt, Chalmers, Maloney, Brooks, & Oliver, 2012). This is illustrated by the large increase in earnings per share seen in the market performance section. In the data,
All three companies under analysis in this part of the report including Airbus Group, the Boeing Company and Lockheed Martin are operating in aerospace and defence industry within industrial goods sector. Financial performance of Boeing is assessed by analysing a series of ratios measuring the efficiency, liquidity, economic value added and profitability of the company accounts. For the reason that ratio may be of little meaning without a yardstick with which it was contrasted, recent performance is therefore compared with progressional results over a period of time using trend analysis. Moreover, cross-sectional analysis is employed to evaluate financial performances of
Lets take a look at the expenses listed under “general and administrative” on the horizontal analysis worksheet. These particular expenses are costs a business incurs when performing normal operations. For years six and seven there was an increase of a little over 20%, or approximately 156 thousand dollars. Then in years seven and eight there was another slight increase. In order to maintain consistent or increased profits without raising prices and/or selling into new markets in order to increase sales figures, a business would have to cut expenses.
The purpose of this study is to compare Spirit Airlines with American Airlines using the financial ratios of liquidity, activity, debt, profitability and the market, and to derive some concrete conclusions about the financial nature of Spirit Airlines. According to Spirit Airlines (2015) “Historic Stock Lookup,” from 2011 to 2014, the year-end stock prices have increased by 79.4%, which is outstanding. Thus, Spirit Airlines will be used as a benchmark in terms of comparing
When determining which company has the most to offer it is necessary to look at each set of numbers from several different views. For instance this paper will cover vertical and horizontal analysis, profitability, solvency, and liquidity ratios. I will be explaining how each set of results play into the decision making of which company would be best to invest in, by comparing both companies numbers in able to collect the necessary data to make a calculated decision.
The airline industry is an extremely competitive industry and is also a highly seasonal industry. Profit can be drastically affected by fluctuations in energy prices or economic downturns (Maverick, 2015). Key financial metrics utilized by analysts in the airline industry include the quick ratio, the return on assets ratio and the debt capitalization ratio, which was already covered earlier (Maverick, 2015).
Various financial ratios are used by managers and investors to analyze company's financial health. In this section we describe return on equity analysis to measure the Southwest's performance. ROE is viewed as one of the most important financial ratios. It is used in an effort to evaluate management's ability to monitor and control expenses and to earn a profit on resources committed to the business. Three levels of ROE ratios assess Southwest Airlines' strengths and weaknesses, operating results and growth potential. These ratios are used to measure how efficiently the assets are being used to generate net income and sales. The ratios also allow
The purpose of this memorandum is to address the profitability issues at Continental Airlines and to estimate the costs for 2009 to forecast the future outlook of the company. To address these issues, I used regression analysis to observe what effect the 11% reduction in flying capacity would have on the firm’s future operating costs. I also used the results from the regression analysis to verify the costs that, if reduced, would further comply with the implementation of cost-cutting initiatives and operational efficiencies that the company is striving for. Lastly, I consolidated the data to forecast Continental’s financial outlook for 2009, then provided insight
Thank you for sharing valid and important information about the Singapore Airline case. You mentioned the fact that it is more complicated to improve something that is already good than something that actually needs improvement. This statement is very interesting and true. In the field of dance, dancers are exposed to this situation in a daily basis. After every time they perform a choreography, their rehearsal director and artistic director provide feedback that help them be better next time they have to perform the choreography. Most of the time in the feedback section they tell the dancer that they looked great and are pleased with the performance. However, they believe
The purpose of this study is to compare Spirit Airlines with American Airlines using the financial ratios of liquidity, activity, debt, profitability and the market, and to derive some concrete conclusions about the financial nature of Spirit Airlines. According to Spirit Airlines’ Historic Stock Lookup (2015), from 2011 to 2014, the year-end stock prices increased by 79.4%, which is outstanding. Thus, Spirit Airlines will be used as
7. Current Competitors: “The Company faces competing service from at least one, and sometimes more than one, domestic airline including: Alaska Airlines (Alaska), Delta Air Lines (Delta), Frontier Airlines, JetBlue Airways (JetBlue), Hawaiian Airlines, Southwest Airlines (Southwest) and AirTran Airways (Air Tran)”
First of all, Anova Airlines (AOV) is a small, privately held passenger airline based out of New Orleans (MSY) in Louisiana. AOV provided us with comprehensive data on daily flight operations, revenues, and costs for each route for which it is permitted to carry passengers. Anova Airlines has some routes that are profitable, and it has some routes that are non-profitable. Consequently, the load factor between AOV routes vary from one another. Furthermore, there is a positive correlation between load factor and total revenues. Next, the elimination of baggage fees is predicted to have a negative impact on total revenues. Furthermore, it is advised to further study the data for future variances. From the results of the data, it is advised to
There will now be a look at the profitability aspect of Qantas airways operations. The following ratios have been selected for the last two most recent years of 2015 and 2016 these are the Gross profit margin, return on equity (ROE), and Return on Assets (ROA).The Ability to make profits and secure returns for investments are key indicators of a company’s financial viability (Birt, Chalmers, Maloney, Brooks, & Oliver, 2012). This is illustrated by the large increase in earnings per share seen in the market performance section. In the data,
Review of Ryanair’s and British Airway’s current financial situation ........................................................ 2 Liquidity ..................................................................................................................................................... 2 Performance and earning .......................................................................................................................... 3 Solvency..................................................................................................................................................... 3
As public biggest airline company in Singapore, Singapore Airline has several key business activities ranging from engineering, flight services until cargo services, but their main activity is more on flight services. Singapore Airline is relying heavily on Singapore financial system to operate their business. One of the evidence is that SIA benefiting from the financial market as the company’s share has been listed in SGX. As stated on Singapore Airline Annual Report, SIA has a cash surplus for the past 10 years on average………. Singapore financial system has help this company to grow and develop rapidly by their financial market, institutions and instrument, which will be discussed further later.