Latest News
HomeRegional NewsAsia-PacificSIA considers selling Virgin Atlantic`s stake

SIA considers selling Virgin Atlantic`s stake

Sir Richard Branson, Virgin Atlantic founder, considers buying back a 49% stake in the trans-Atlantic airline from Singapore Airlines (SIA). According to the Centre for Asia Pacific Aviation, SIA is…

Sir Richard Branson, Virgin Atlantic founder, considers buying back a 49% stake in the trans-Atlantic airline from Singapore Airlines (SIA). According to the Centre for Asia Pacific Aviation, SIA is  reportedly considering selling the stake it acquired eight years ago for GBP600 million, as it pursues other options, including China Eastern Airlines.

Analysts predict that if the stake changed hands now, it would be worth between £900m and £1bn. Virgin Group has long held aspirations to expand in this region even though Virgin Atlantic has not been a major contributor to SIA’s earnings.

Sir Richard`s Virgin invested time and effort to enter in the Chinese market eyeing Macau and in the Australian market with Virgin Blue. Also it expanded operations via Hong Kong to Australia competing directly with SIA.

Private equity groups are perhaps the more likely buyers of the 49% share in Virgin Atlantic, with Branson expected to preserve his cash for a tilt at regaining control of Virgin Blue, when Toll Holdings decides to exit says CAPA.

SIA’s disposal of Virgin Atlantic would also remove the impediment for Virgin Blue using the Virgin branding on international routes from Australia (SIA has veto rights on use of the brand internationally), which will have powerful ramifications in the US market, where Virgin America is closer to launching transcontinental services from San Francisco and where Virgin Blue is expected to put its first B777s from Australia. These would happily link with Virgin Atlantic`s London-San Francisco service.

But none of these changes will happen quickly enough to prevent Virgin Blue putting an ultra-low cost unit into the Australian domestic market, particularly with Tiger Airways announcing several new routes into its Queensland heartland. “Virgin Lite Blue” could be announced within weeks. And even here there could be the tantalising prospect of a bidding war between SIA (and/or Tiger Airways` other owners) and Virgin Group for a large chunk of Virgin Blue. Wherever Sir Richard goes, life is sure to be interesting.

Theodore Koumelis
Co-Founder & Managing Director - Travel Media Applications | Website

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

19/07/2024
18/07/2024
17/07/2024
16/07/2024
15/07/2024