Tuesday, November 6, 2012

What 54% Drop in S'pore Airlines 2nd Qtr Net Profit Mean for Sinkies

Due to weak demand & high oil prices, S'pore Airlines(SIA) posted a 54% drop in 2nd qtr net profit. It was reported that fuel costs accounts for 41% for the airline & 50% for its cargo planes.

Its CEO Goh Choon Phong said: "Every US dollar increase in fuel cost per barrel will contribute almost S$45 million in terms of cost for the group.

No clear skies ahead for SIA also means no clear skies ahead for the masses. As baby boomers around the world are retiring, there's ain't much $$ to spend(weak demand). Era of cheap oil is over as Deepwater Horizon oil spill diasaster has shown -drilling in deepwaters is desperate.

After a break of 26 years, now the Youth Olympic Games overbudget minister is buildling 10 hawker centers in 5 years. Previous timeframe is 10 years. If don't build the hungry old peasants gonna riot already!

Asset rich cash poor is what describes many sinkies as bulk of their retirment $$ are used for housing mortgage. High oil prices will eventually force these baby boomer retirees to sell/downgrade their homes to buy food.

The incumbent Pro Alien Party cannot win against these greater forces (expensive oil + boomers retiring). Hence the collapse of the property market which is already in bubble territory.

The economy does not like high oil prices as seen in the oil shocks of the 70s. This time we have a wave of retiring baby boomers as 'catalyst'.

Expensive oil + Boomers retiring = Property market collapse(SG) & Severe Recession

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