From the course: Running a Profitable Business: Understanding Financial Ratios
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Singapore Airlines' low leverage
From the course: Running a Profitable Business: Understanding Financial Ratios
Singapore Airlines' low leverage
- All right, Kay, what's the best airline in the world? - I've been told that Singapore Airlines is the best airline in the world. - Yes, Singapore Airlines is consistently ranked in the top three of best airlines in the world. - So that must mean that Singapore Airlines must have a very good return on equity, ROE, probably over 20% per year. - Ah, not necessarily. In fact, in recent years, Singapore Airlines has had some financial challenges, and then in 2013, the airline's ROE was just 2.7%. - 2.7%, ouch! - Yeah, but let's go back to happier times, you remember that case we teach involving the Chinese airline industry in 2007? - Yeah, I do. - Then you also recall that in 2007, Singapore Airlines was the most profitable airline in the Asian region. - Yeah, the most profitable by far. - And yet, even in this very profitable year of 2007, Singapore Airlines had a return on equity of only 14%. S'good, but it's not…
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