Operating conditions remain challen

Operating conditions remain challenging, but the state of the SIA Group is strong.
The Board and Management are confident that the developments of the past financial year as well as those that are planned will ensure that this remains the case in the years ahead.
The last financial year was one of significant development for the SIA Group. This year’s Letter to Shareholders will therefore focus on the many important steps forward that have been taken to ensure we retain our industry-leading position.
The 2012/13 financial year was an especially busy one for management and staff, with numerous initiatives to strengthen the three main pillars of our brand promise, namely Service Excellence, Product Leadership and Network Connectivity.
Singapore Airlines enhanced its network during the year while it also ordered more Airbus A380s and A350s. At the same time Boeing 787 orders were transferred to Scoot, which launched in June as the fourth airline in the SIA Group. Scoot has been steadily expanding its network and the business has proven to be a success to date, with a good customer following and healthy passenger loads.
Regional full-service arm SilkAir also continued to add new destinations to its fast-growing network and placed the biggest aircraft order in its history.
In-flight connectivity was launched on Singapore Airlines’ longhaul aircraft and a large contract was signed with Panasonic for the supply of new in-flight entertainment systems. A retrofit programme was launched for Boeing 777-200ERs to fit them with new Business Class seats and larger in-flight entertainment system screens in Economy Class. Our lounges around the world will also be revamped from this year with a new design concept, while the next generation of in-flight cabin products will be rolled out in the coming months.
The Group has also been investing in upgrading IT systems. In July, Singapore Airlines and SilkAir cut over to a new inventory and reservations system, which was followed recently by an upgrade of check-in systems.
Customer service is also not being overlooked, as it remains a crucial differentiator. To help deliver an enhanced travel experience that focuses on meeting more of our customers’ travel needs, a contract was signed recently with Accenture for the development of a new Customer Experience Management (CEM) system. Implementation is scheduled for the second half of 2014 and it is one element of a multi-million-dollar investment programme.
Ultimately it is our people who make the real difference in setting us apart from the competition. The new CEM system will help our employees – who are our greatest asset – to deliver even better experiences to our customers.
New partnerships were also agreed with more airlines during the last financial year to provide customers more choices of flights through codeshare arrangements. We acquired a 10 percent stake in Virgin Australia in October, and recently agreed to acquire another 9.9 per cent. Agreement was separately
reached on the sale of our 49 per cent of Virgin Atlantic Airways. Subject to regulatory approvals, the transaction should be completed late this calendar year.
The many developments outlined above are all intended to ensure that the SIA Group is well positioned for the future, in an increasingly competitive landscape. In addition to remaining a leader in the delivery of innovative products and services, our portfolio approach to airline operations positions the Group well for different business cycles, with Singapore Airlines and SilkAir on the premium end of the spectrum and Scoot on the low-cost end in partnership with Tiger Airways, in which we have a strategic stake.
Before I conclude, allow me to put on record my appreciation to my fellow Directors for their contributions over the past year. During the last financial year we welcomed to the Board Mr Hsieh Tsun-yan and Mr Gautam Banerjee, while Mr David Gonski retired from the Board. Allow me to express on behalf of the Board and Management our thanks to David for his many contributions over the years.
I would like to close by expressing my gratitude as always to shareholders for your continued support, particularly given the significant investments we are making. Operating conditions remain challenging, but the state of the SIA Group is strong. The Board and Management are confident that the developments of the past financial year as well as those that are planned will ensure that this remains the case in the years ahead.