Overseas investment options for SIA
Singapore Airlines (SIA) could revisit overseas investment plans in China and India should a deal go through on the sale of a 49% share in Virgin Atlantic.
Although the airline is unable to comment on investment plans while talks are underway, Chief Executive Officer Goh Choon Phong told investors last month the airline is “very open” to investment opportunities in growth areas, including India, China and Southeast Asia.
Singapore Air said this week it’s in talks with Delta Air Lines to sell its 49% share of Virgin Atlantic as competition from Middle East carriers and slower growth in Europe and the U.S. hit long-haul travel. The carrier is instead focusing on growth in the Asia- Pacific region, buying a stake in Virgin Australia Holdings and adding new planes for regional routes.
Paul Yong, Director of Research at Singapore-based DBS Vickers Securities told Bloomberg; “They’d be looking at mergers and acquisitions with or without this deal. But if it does go through, their war chest will be beefed up significantly.”
Singapore Air already has a stake in China Eastern-controlled China Cargo Airlines, and could make a new approach on China Eastern after having a bid turned down five years ago. China Eastern Chairman Liu Shaoyong has repeatedly said that the carrier is still open to selling a stake to a strategic investor, while China Southern Airlines is another attractive prospect as air travel in China continues its rampant growth.
Having previously shown interest in Air India, Singapore Air could also look for a deal in India following a recent loosening of foreign-investment rules. Bloomberg reports that Jet Airways is close to selling a 24% stake to Etihad, worth approximately US$290 million. Cash-strapped Kingfisher Airlines, which halted operations in October, is also seeking outside investment.