Facts About Two Airlines
By Random Thoughts
MAS is about half the size of SIA or put in another way MAS has fewer aircrafts than SIA but why was aircraft maintenance so much higher than SIA? SIA uses about 3% of sales to take care the maintenance but MAS uses a whopping 11% of its sales revenue to service the aircraft.
Recently I read an article on MAS and Air Asia. HERE It prompted me to take a closer look at MAS from the financial angle. However instead of comparing to AirAsia I compare the financial statement of MAS with that of SIA. Why SIA and not Airasia ? The reason is AirAsia being a budget airline has a lower cost structure. Further it is always better to bench mark against a good competitor , isn’t it ?
Although one would argue that it is not totally fair to compare the two airlines financial because of the different in companies size and different financial period as SIA financial year ends 31 March and MAS financial year ends 31 December. But in the absence of other info, financial statements comparison serves as a good starting point.
Now let us take a look at the two airlines’ INCOME STATEMENTS.
I used exchange rate of 2.2 ringgit to 1 S$. The % shown is % to Sales of various expenses items.
| MAS & SIA COMPARISON | ||||||
| SIA | SIA | MAS | ||||
| $S | RM MILLION | RM MILLION | ||||
| YE31/3/2010 | 2.2 | YE31/12/2010 | Note | |||
| REVENUE | 12,707 | 27,955 | 12,980 | |||
| Staff cost | 2,155 | 4,740 | 17.0% | 2,164 | 16.7% | |
| Directors Remuneration | 5 | 11 | 0.0% | 4 | 0.0% | |
| Fuel cost | 4,195 | 9,228 | 33.0% | 4,384 | 33.8% | |
| Depreciation | 1,714 | 3,770 | 13.5% | 373 | 2.9% | |
| Armotisation of Intangible assets | 43 | 94 | 0.3% | 33 | ||
| Aircraft maintenance | 342 | 753 | 2.7% | 1,467 | 11.3% | A |
| Commision | 317 | 696 | 2.5% | 487 | 3.8% | |
| Landing,parking, & overflying charges | 589 | 1,295 | 4.6% | 246 | 1.9% | |
| Handling +in flight meal +crew+passenger costs | 1,416 | 3,114 | 11.1% | 1,389 | 10.7% | |
| Rental of aircraft | 553 | 1,216 | 4.4% | 1,607 | 12.4% | B |
| Material/Oth Engineering | 375 | 826 | 3.0% | 71 | 0.5% | |
| Adevertising & Promotion | 210 | 463 | 1.7% | 93 | 0.7% | |
| Computer booking system | 184 | 1.4% | C | |||
| Insurance | 58 | 127 | 0.5% | 60 | 0.5% | |
| Compay accomodation / Rental | 142 | 312 | 1.1% | 181 | 1.4% | |
| Other Operating Expenses | 532 | 1,170 | 4.2% | 582 | 4.5% | |
| 12,644 | 27815.92 | 13,324 | 102.7% | |||
| Operating Profit/(Loss) | 63 | 139.48 | 0.0% | (344) | D | |
| Derivative Gain | 139 | E | ||||
| Finance Expenses (net) | -68.9 | -152 | -138 | |||
| Finance Income | 49.5 | 109 | 71 | |||
| Other Operating Income | 92 | 202 | 0.7% | 536 | 4.1% | F |
| Associated Companies/JV | 149 | 328 | 18 | |||
| PROFIT BEFORE TAXATION | 285 | 627 | 282 |
Those highlighted in color : blue and red are items that seems to be defy logic and common sense and are further explored below:
A) Aircraft maintenance
MAS is about half the size of SIA or put in another way MAS has fewer aircrafts than SIA but why was aircraft maintenance so much higher than SIA? SIA uses about 3% of sales to take care the maintenance but MAS uses a whopping 11% of its sales revenue to service the aircraft. AND not only the % to sales was high , the absolute figure was also higher than that of SIA. I could not help but guess and hopefully I am wrong that someone are getting really rich at MAS and indirectly the nation’s expenses.
