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The first is the "fat" which has built up over several years of fast growth and government patronage. Profits in Asian airlines benefited by the general strength in foreign investment in Asia, a soaring domestic tourism market fuelled by the new wealth of the Asian middle class, and increasing intra-regional business travel and freight. The even more dramatic decline in the value and magnitude of these sectors has found strategic and contingency plans wanting.

Secondly, most Asian airlines debt is in US dollars. With currencies devaluing across the board in the preceding 12 months from 90% at the high end to 20-30% at the low end, debt in at least one case has become impossible to service and in almost all cases a major drain on finances.

Garuda recently announced it would not be able to operate from January 1999 without a major cash injection. Indonesian domestic carrier Sempati, one of Tommy Soeharto's playthings flew its last sector 10 days ago.

Philippine Airlines has been dealt a major blow by a pilots' strike which grounded flights for an extended period. While the flash point was the forced retirement of a senior pilot during a staff restructuring exercise, the Rat's insider suggests the major issue was the pilots unwillingness to take a package that included a stake of ownership in the airline in lieu of a portion of salary.

If so, this is does not augur well for not only the whole industry but also for Asian business as a whole. We do not know the details on the fairness of the specific Philippines Airlines proposal, but the principal seems pragmatic and sensible. In the preceding business era, employees were happy to accept rapidly increasing salaries and let owners take the risk and the rewards of this risk. Any form of employee participation, of which shared ownership is a high value option, is extremely foreign to most Asian business and organizational designs. Few exceptions exists, one successful model being ACER in Taiwan. It requires a massive turnaround in values and expectations. Just as the populace let governments take major control in return for salary goodies, the same politics rules in organizations. The bosses profits were not questioned. In return for rising standards of living via paypackets, employees gave loyalty (for as long as they couldnt find a higher paying job) and all care... but little reponsibility. Turnover rates soared and training and development was given a low priority as training investments would be lost on the departure of an employee. Employees became commodities and not partners in a business. Smart global minded businesses will increasingly ask for increased responsibility from employees, and this is a big ask in traditional Asian paternalistic organizations. Employees are not as used to taking responsibility for performance as they are with "serving".

Almost airlines have cut routes and are discounting heavily to retain the share of a dwindling customer base. Cathay Pacific continue to make staff cuts, Thai Airways are looking for investors, (not only due to the crisis but also government privatisation initiatives), and Malaysian Airlines are on the defence after what is widely seen a botched restructuring job.

Almost all our predictions, including cancellation and delays of new aircraft purchases, route cancellations and indeed divestment and allowing leases of aircraft to lapse have materialised.

In amongst all of the trauma, Singapore Airlines are not only weathering the crisis well, but will come out the other end with substantial increases on their already strong market lead.

Some of the reasons... a flexible organizational structure, due to cutting levels of management over the past 10 years allowing decisions to be made as fast as possible in response to an unexpected crisis, increasing accountability, and Singapore's more global strategies which have come to roost as globalization starts to take its toll of more insular economies.

Many of Singapore's enterprises had done a good deal of work making their organizations leaner and more flexible, after realising their exposure as a small country, albeit with a large economy, to the fast growing economies of their neighbours and those outside the region. Partly by design, they were better prepared for any crisis. Organizational and strategic change is a long term and sometimes painful process. These companies are well on the way, while many of Asia's crisis-beseiged companies, they are caught in a Catch-22. There is no money nor security for planned organizational and marketing changes, but change is essential.

Singapore Airlines WILL take a major stake in Thai... take it from the Rat!

More lessons to be learnt for all Asian business here, we are sure....