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Overseas State-owned Enterprises: Analysis of the Performance of Singapore Airlines and Implications for China



By Guo Wei and Zhang Wenkui, DRC


As a typical state-owned enterprise, Singapore Airlines is the only airline company among Fortune’s top 50 companies held in esteem all over the globe. Its success is linked with the special share ownership design, scientific corporate governance and a harmonious government-enterprise relationship. First, with regard to the brief history and the present performance of Singapore Airlines, through development of over 40 years and taking Zhangyi Airport as the base, this company has been mainly operating international air routes. It has 102 passenger planes and has formed an air network covering 103 destinations in 39 countries and regions. The operation income of this company comprises of revenue from passenger traffic, freight traffic and other sources. Since its foundation, Singapore Airlines has never had any annual losses. Second, as for the company’s shareholding structure and corporate governance, Singapore Airlines has a highly concentrated shareholding structure, with government holding around 56% of shares and the top five permanent shareholders holding over 80% of shares. The company allows all employees to enjoy preferred stock option to ensure stability of the team. Independent directors, who are all business leaders from private enterprises, account for over 3/4 of total board members. Third, in terms of the government-enterprise relationship of Singapore Airlines, Temasek Holdings, on behalf of the government’s shareholdings, has increased value of state-owned assets by exercising shareholder’s rights. The Singaporean government has made very few comments on the company’s operation and hardly provided it with any subsidized support. Instead, the government has adopted an open attitude towards Singaporean airline industry and encourages fair market competition. Fourth, China could draw the following implications. 1. Making sustained innovation is the key to propel Singapore Airlines to gain success. 2. Regulated corporate governance structure is conducive to business further progress. 3. The “Temasek Model” needs to be judged in a sensible and objective manner.


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