SIA to continue global expansion

SIA to continue global expansion

Agence France-Presse, Singapore

Singapore Airlines (SIA) must continue to spread its wings across the globe despite recent turbulence in the industry, its chief executive said.

Cheong Choong Kong said in a New Year's message to staff seen Wednesday that expansion overseas was key to increasing returns because Singapore's domestic market was too small for the airline, one of the biggest in Asia.

SIA could post its first full-year loss in the current financial year ending in March 2002 due to the impact of the travel industry slump sparked by the Sept. 11 terrorist attacks in the United States, and a debacle in SIA's investments in Air New Zealand, he said.

"There is no denying that our mission has suffered a major setback but we have always warned that the path to globalization is strewn with risk," he said in his message published in this month's issue of the SIA newsletter, Outlook.

"The alternative of carrying on as usual, with our fortunes reliant solely on operations based in Singapore, would mean stagnation and declining returns on capital," he said.

Virgin Atlantic, which is 49 percent owned by SIA, suffered from the battering of the trans-Atlantic route.

Last year, SIA also saw its 25 percent stake in Air New Zealand dwindle to 4.5 percent after the New Zealand government rescued the airline from near-bankruptcy following the collapse of wholly owned subsidiary Ansett Australia.

Ansett's collapse led to a writedown of S$300 million (US$163 million) in SIA investments in Air New Zealand.

"This makes the task of keeping financial year 2001-2002 out of the red even more difficult," Cheong said.