Singapore Airlines (SIA) has made a S$453 million takeover offer for budget carrier Tiger Airways, of which it now owns 55.8 per cent.
Advertisement
TEMPO.CO, Jakarta- Singapore’s flagship carrier Singapore Airlines (SIA) said on Friday, November 6, that it will fully take over budget airline Tiger Airways.
Tiger’s shareholders also have the option to use the cash to subscribe to Singapore Airlines shares at S$11.1043 apiece, according to a regulatory filing. This is in large part due to Tiger’s own restructuring initiatives.
Scoot and Tiger have been working together in a few aspects of their network and marketing activities over the a year ago, and SIA hinted that its low-fare units would be more closely integrated in future.
“This a tactically well-timed move for Singapore Air”, Alan Richardson, a Hong Kong-based money manager at Samsung Asset Management Ltd, said in an e-mail. “By doing, so earnings are at an inflection point”.
It plans to delist and privatise the carrier, and drive closer cooperation and integration with the other airlines within the group, including regional arm SilkAir and long-haul budget arm Scoot, amid intense competition from rivals.
Singapore Airlines’ first-half operating profit jumped 40 percent on the back of an improvement across all of its business units and lower fuel costs. But overcapacity in South-east Asia as the region’s carriers expanded rapidly created a cut-throat operating environment for the aviation industry, depressing yields.
In the three months to June this year, Tigerair reported a net loss of Sg$ $1.7 million, narrowing from a whopping Sg$65.2 million loss in the same quarter the year before. “This ultimately strengthens the SIA Group as it enables us to tap into market segments that would not otherwise be available to us, providing new revenue- and profit-generation opportunities”.
Goh Choon Phong’ email to his employees also said that SIA was of the belief that Tiger’s prospects to grow independently were limited in the highly competitive LCC (low-cost-carriers) landscape in Southeast Asia. Goh, however, ruled out a merger between Tiger and Scoot at this time.
Advertisement
“I can see a number of unexhausted areas of synergies”.
