Wayne Rooney’s Kin and Singapore Airlines

Beauty is always in the eye of the beholder…

 …so bear with me if you don’t agree that Wayne Rooney might be Britain’s most famous, current football player, but he’s not going to be gracing the cover of GQ magazine or running television ads for Gillette anytime soon.

This is coming from a guy who (check out my mugshot) was deemed “Not so very handsome” by his former Fillipino maid—a cutting remark that has either:

A.  Embittered me

Or

B.  Liberated me with honesty

It’s not Wayne Rooney himself that I’m having a go at.

 After all, with receding hair still clinging to his forehead like Rooney on an opponent’s jersey, I recognize the man’s in his aesthetic prime.

But last year, while sitting in a pub, I overheard a conversation between two men—one of which would have been a spitting image of Rooney, if you could have aged Rooney thirty years in a specially crafted British pub.

Speaking to an Australian friend at a pub here in Singapore, the 55 year old “Rooney”said something like this:

“Now wait, I’ve flown meself on Singapore Airlines a coupla time now, and each time, the flight attendants ‘av wanted me body”

To convert that from English to English, “Rooney” was suggesting that the flight attendants on Singapore Airlines thought he was hot.

What “Rooney” doesn’t know about Singapore Airlines

1.  Young mothers love the airline because flight attendants learn baby’s names and wait on them with loving attendance

2.  Men love Singapore Airlines because the beautiful flight attendants may be trained at Sing Air headquarters to (very very subtly) flirt with older men who book flights for the eye candy ego boost.

Rooney’s Australian buddy laughed at old Rooney.  “Come on mate, they’re paid to flirt with you.”

Old Rooney knocked back another Tiger Beer after cursing his mate and a particularly heated discussion followed.

So what’s this doing on a financial blog?

In his fabulous little book, Do You Want to Make Money or Would you Rather Fool Around? John Spooner talks about businesses that “go the extra mile”.  They can be little, service oriented things, like ensuring that employees listen well, treat customers with dignity and provide the unexpected.

Spooner suggests that when choosing between two closely competing businesses, the one treating people well has a higher likelihood of succeeding—as a business and an investment.

Not part of Spooner’s notes ( but equally important, I think) is asking employees how they’re treated by employers.  It might sound odd, but I always ask about this when I’m interested in a company.  I can tell you that most employees at the Mens Wearhouse, for example (men’s retail clothing) are treated extremely well, and at The Gap…..”Ah, it’s just a job.”

Is that part of the reason that Mens Wearhouse stock has increased by more than 600% since 1992, while The Gap has risen less than half that?  I think so.

The Airline industry is a lot tougher than retail.  When Richard Branson, the British billionaire and owner of Virgin Atlantic Airlines was asked how a person becomes a millionaire, he quipped:

“It’s easy.  Start out as a billionaire and buy an airline”

With prolific bankruptcy rates, the Airline industry (as a whole) hasn’t made a penny for investors.  Losses have exceeded profits.

When the Wright Brothers got off the ground in 1903, Warren Buffett suggests that if a capitalist could have gone back in time to witness that first flight, he would have shot Wilbur down.

But if you can find a great business in a tough industry, sometimes you can make a bundle.

The toughest industry, in my view, is the airline industry.

And the greatest airline, by far, is Singapore Airlines.  (Remember what I said about “beauty” “eye” and “beholder”)

It might help that the debt free Singapore government owns most of the shares.  With such a stable long term shareowner, it makes things a lot easier during economic duress.

Compare its stock to a typical U.S. airline, like Delta, and you can see proof in the pudding:

In 2007, if you bought shares in Delta, you would have lost money.  On Singapore Airline stock, you’d be up 50%.

Does Delta or United Airlines go the extra mile for their passengers or their employees? 

Come on.  They do more firing than hiring and their flight attendants make you feel it if you’re ever corralled in one of their planes.  If you like Delta, United or any of the long distance American carriers, then I can say with certainty that you’ve never flown Cathay Pacific or Singapore Airlines.

Then there’s the thing we’re all most interested in:  airline stocks.

Compare Singapore Airline stock to those of other world airlines:  it’s less volatile, and a lot more profitable. 

Why is that?  One of my theories is the service and “love” they give to guys like old Rooney.  And it’s tough to argue with love.

The most profitable airline in history (for shareowners) is SouthWest Airlines.

It’s tough to argue with their 5000% stock increase since 1980 (see the blue line below, compared to the green line representing the S&P 500)

And with the ticker symbol “LUV”, I rest my case.

I wonder what Mr. Rooney would think of them.

 

 





Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I’m happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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7 Responses

  1. DIY Investor says:

    It's not easy for airlines to make money because they are so capital intensive. When the economy expands they make huge capital expansions by adding to their fleets and then they pay for it in a softening economy when their planes aren't full. Thus, Singapore airlines and Southwest are to be commended.

    In terms of your Singapore/Delta graph, it looks to me that a 50% gain would have been made if you bought the shares in 2006.

    Some pictures of "…the beautiful flight attendants…" rather than Rooney would have made your point better, IMHO.:0)

  2. "This is coming from a guy who (check out my mugshot) was deemed “Not so very handsome” by his former Fillipino maid"

    Ouch! Is that why she's qualified with "former"?

    The Asian airlines always had pretty air hostesses from what I remember. On the other hand, if any north american airline tried that they'd be hit with so many lawsuits that they probably would just fold. The customer experience thing is something, too; usually the north american hostesses are friendly enough, but I have encountered some that have seemed rather pissed!

    It's all about great customer service, and having employees that care and give a sh!t is one big step toward getting there.

  3. @DIY Investor

    I'm going to claim that Rooney is a long lost brother, and that my wife appreciates his photo on the post, rather than a hottie flight attendant that I scan the internet for. Point taken though. You're right Robert.

  4. @Kevin@InvestItWisely

    Hey Kevin,

    You're right about those lawsuits. It's pretty obvious what the Asian airlines have done with their hiring.

    As for the maid, to be honest, she deemed me "Not so very handsome" but "Good-looking". My wife and I laughed for ages when my wife asked her if I was handsome:

    "Not so very" she'd say.

    But "Good-looking"

    She went back to the Phillippines to get married. We visited her there a few months later. Wages in Singapore that we considered relatively paltry made her a really big cheese in her little mountain village. She definitely owned the nicest house.

  5. @DIY Investor

    Hey Robert,

    Taking your advice, we added another photo. Thanks!

    Andrew

  6. I've never flown Singapore Airlines, but have flown Southwest many times. I affectionately refer to it as "the cattle car." They are no frills, and a reputation for having sometimes zany pilots and stewardesses, but you have to admire their track record for making money. They are clearly the best of the US airlines. However great they look in the rear view mirror, I'm not sure what the future holds. This is a tough business to make a consistent profit in. I encourage you to track down the excellent book "Nuts!" by Kevin & Jackie Freiberg that documents the founding of Southwest and its unique corporate culture.

  7. Hey Biz,

    Thanks for the book recommendation. I've heard of it, and I'm very interested in reading it.

    The funny thing about SouthWest is all the companies that are trying to copy them. The Canadian version is WestJet. In Asia, we have JetStar, Air Asia and Tiger Airways—all very similar to SouthWest. Are there some copycats in the U.S. as well?

    I guess you can make money offering a great brand and service, like Singapore Airlines, or you can make money by offering no frill, cheap sales, like SouthWest Airlines, WalMart and TJX Companies.

    With the airline industry being so capital intensive and unpredictable (nothanks to fuel prices), you're right about it being something tough to predict, going forward. I wouldn't personally buy an airline stock. But if you twisted my arm and made me buy one, it would be Singapore Airlines. They'll never file for bankruptcy. It's a big brother thing!

    I'm enjoying your thoughtful contributions to my blogsite Biz. Thank you!

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