A more lucrative area of recovery has been in cargo traffic, an area in which American carriers are traditionally not very strong. But Korean Air, Singapore Airlines and Cathay are among the world's top 10 cargo carriers. And Singapore Airlines carried 16.4 percent more freight in June than the same month last year, as the American economic recovery gave rise to shipments of food, toys, textiles and electronics, analysts said.
Analysts worry that if America's recovery falters, such shipments would dry up, and eventually Asia's consumers would stay home, too. But just as Asia's airlines were well poised to take advantage of the economic recovery, analysts say, they are better prepared for downturns.
Long coddled by government shareholders, protected markets and docile -- if any -- unions, many Asian airlines learned from the region's own financial crisis in 1997 and 1998 that they need to keep a lid on capacity and debt.
Singapore Airlines, for example, managed to become the world's sixth-largest international passenger carrier without borrowing. Late last year, the airline issued its first bonds, raising S$900 million, largely to establish a credit rating and leverage its huge cash position. After Sept. 11, it cut salaries 15 percent and has now restored them.
Still, with only 4 million people on its tiny home turf, Singapore Airlines relies on carrying passengers from Asia to Europe or North America.
Its efforts to crack new markets through acquisition are usually hamstrung by the fact that Singapore's government owns 55 percent of the flag carrier and regulators are reluctant to allow the sale of an airline to a government-controlled entity.
What headway it has made has soured. For example, it held a 25 percent stake in Air New Zealand, but was rebuffed in its bid last year to buy Air New Zealand's Australian carrier, Ansett. It then watched as Ansett closed and Ansett's parent, Air New Zealand, lurched to the brink of ruin. A bailout by the New Zealand government reduced Singapore Airlines stake to less than 6.5 percent, spurring a US$152.6 million write-off.
Qantas is negotiating to buy into Air New Zealand; on Wednesday, it said it planned two stock issues to raise US$432 million to upgrade its fleet and for other "potential investment opportunities."
To gain access to the trans-Atlantic market, Singapore Airlines paid US$960 million in 1999 for a 49 percent stake in Virgin Atlantic, which is now losing money and detracting from SA's bottom line.
Finding a way to make money in new markets remains Singapore Airline's biggest challenge.
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