Singapore Airline to focus on Asia after Virgin divestment

Singapore Airline to focus on Asia after Virgin divestment


The Singapore carrier's tie-up with British billionaire Richard Branson's Virgin Atlantic never really took off since the alliance began 12 years ago when the stake was bought for 600 million pounds ($966.5 million).



Analysts said SIA, consistently one of the world's most profitable airlines, had little say in how Virgin Atlantic was run by the flamboyant Branson, and the sale allows it to exit an underperforming investment in the troubled European market.

"SIA can now focus on investments in the Asia Pacific region," Brendan Sobie, a Singapore-based analyst with industry consultancy Centre for Aviation, told AFP.

Sobie said it made more sense for Delta to have a strategic stake in Virgin Atlantic as there are more synergies in their trans-Atlantic network rather than with an Asian carrier.

Jason Hughes, an analyst with IG Markets Singapore, said that despite the higher acquisition price paid by SIA, the $360 million "will go down as a profit, as losses had already been accounted for in previous years".

Shukor Yusof, an aviation analyst with Standard & Poor's Equity Research, said SIA can use the extra cash to "redefine its business strategy on top of beefing up its regional subsidiaries".

"It's also good to exit out of Europe because the market conditions there are quite atrocious," he told AFP. "The sale frees up a stake which SIA has been bogged down with."


"Branson remained the controlling shareholder and he called the shots," he said.

Virgin Atlantic also did not have enough slots at London's high-traffic Heathrow airport for SIA to latch on in its bid to gain a share of the lucrative trans-Atlantic route to New York, Shukor added.

Analysts said SIA's decision to buy the stake in Virgin Atlantic in March 2000 was a good move at the time because Asia was just emerging from a devastating financial crisis in 1997 and 1998.

But the centre of global economic power has since shifted to Asia, with the region's travel market now booming because of the rise of an affluent middle class and the emergence of budget airlines.


"This makes the region the largest regional market for air transport, ahead of North America and Europe which each represent 21 percent," IATA said in a statement on their latest industry forecast.




He described the six-hour operation as a "corrective surgery of a lesion" that occurred in the pelvic region, but did not elaborate.

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