How well did Singapore Airlines handle the aftermath of turbulence terror
![How well did Singapore Airlines handle the aftermath of turbulence terror](https://www.travelweekly.com.au/wp-content/themes/bandtv1/img/default.png)
It was a routine flight for the passengers and crew of SQ321, taking off from London en route to Singapore. But about 10 hours into the flight, with breakfast service underway, horror-struck, the plane entered an air pocket and dropped a suspected 6000 ft in just three minutes, killing one man and injuring several others.
It’s no surprise that these kinds of incidents rock the media world, taking over our screens and airwaves in the days that follow. But just what is the impact on the involved businesses after a major crisis, and does it matter much if it wasn’t their fault in the first place?
New research from SenateSHJ has highlighted the magnitude of some of the greatest business crises of over 40 years, with some companies taking years to recover from the financial and reputation damage caused.
In some cases, such as the Star Group and SenseTime Group, the share price has yet to recover. Ardent Leisure Group took years to recover, while others, Union Carbide and Insys Therapeutics, simply went out of business.
The Crisis Value Erosion Index report has analysed the financial impacts of crises on 70 listed Australian and international companies. These included, among others, the 2010 BP Deepwater Horizon explosion and oil spill, the 2014 Malaysian Airlines MH370 flight disappearance, multiple Facebook privacy issues and the 2021-2022 Star Group money laundering case.
Market value impacted
Eighty per cent of companies evaluated saw a drop in share price, with BP’s (50 per cent) most significant drop following the Deepwater Horizon explosion and oil spill. BP’s share price took more than three years to recover.
The modelling used metrics such as share price and earnings per share drop, days to share price recovery, and trend-adjusted recovery to quantify how these crises impacted the companies involved and over what time. The average time for share price recovery of all companies analysed was 60 days.
So, after the turbulence tragedy occurred earlier this week, how can Singapore Airlines hope to bounce back? According to Craig Badings, partner and head of reputation at SenateSHJ, the airline industry, having had its fair share of tragedies over the years, is generally well prepared for the fallout of a crisis, and Singapore Airlines is no exception.
“The numbers show how devastating a crisis can be for a company and its shareholders, and this doesn’t even touch on the brand and personal reputation impacts felt by the company or the executives involved,” Badings said. “Placing a dollar value on a crisis is a stark reminder to companies how important it is to spend the right amount of time, money and effort on risk management.”
“We have seen time and again that companies with the right crisis preparation, management systems, tools and support teams in place are in the best position to minimise the long-term damage from a crisis. They also tend to recover quicker”.
“Any crisis resulting in deaths or injuries is a tragedy for all involved and, from experience, a challenging time for the crisis team given the terrible human impact,” Badings said. “Singapore Airlines responded quickly and provided all the information they could as soon as possible.”
Video response of CEO applauded
Badings applauded Singapore Airlines CEO Goh Choon Phong for fronting up immediately after the incident became known to the public and doing so in a respectful and human manner.
“In his video broadcast, posted soon after the flight SQ321 incident, he was contrite, open, and told it as it was. He showed empathy for those directly and indirectly impacted. And critically, he focused on those most impacted – the passengers and their families and told us what was being done to help them and where families could go for more information.”
“Interestingly, he was filmed in an open-plan Singapore Airlines office without a jacket or tie. It was appropriate for the moment, given he had probably been working around the clock dealing with the crisis.”
The SenateSHJ research categorises the nature of a crisis, the response to it and relevant background information such as the sector. The data shows that businesses in the mining and materials sector had the highest average share price drop of 21.9 per cent. This was followed closely by retail (18.5 per cent) and travel (17.5 per cent).
Crises involving casualties saw an average share price drop of 24.4 per cent and an average earnings per share (EPS) drop of 191 per cent, followed by environmental damage (a 23.4 per cent share price drop and a 222 per cent EPS drop) and then defects and recalls (16.6 per cent share price drop and a 124 per cent EPS drop).
“Our recent Crisis Value Erosion Index report shows that 80 per cent of companies experience a drop in share price after a crisis and take, on average, 60 days to recover. While there has been no discernible impact on Singapore Airlines’ share price, it is still early days and ultimately, they will be judged on whether they dealt with the injured and the families appropriately. To date, they appear to have done an excellent job,” Badings said.
This article first appeared on our associate online publication B&T.
Email the Travel Weekly team at traveldesk@travelweekly.com.au
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