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Singapore Airlines Has ‘No Obligation’ To Virgin Australia Cash Infusion, Committed To Vistara
Apr 30, 2020,
Singapore Airlines is taking markedly different tones to the future of its investments in Virgin Australia and India’s Vistara. Singapore Airlines says it is “committed” to Vistara but is offering no such assurance to Virgin Australia, which has entered voluntary administration.
“Singapore Airlines has no requirement or obligation to put in capital for Virgin Australia,” the airline told its shareholders ahead of an extraordinary general meeting to raise equity. Singapore Airlines also says it has no loans to Virgin Australia, which it owns 20% of. Virgin Australia has debts of A$6.9 billion, administrators found.
Virgin Australia ownership chart
Will Horton
Australia is a critical source market for Singapore Airlines and low-cost subsidiary Scoot. Australia, along with New Zealand, contributes 20% of Singapore Airlines’ revenue.
Singapore Airlines only highlighted the value of the country and not the airline.
“Australia remains an important market to us and we will evaluate our options in due course,” it said. “It would be too early for us to provide any further comments on the next steps regarding our investment in Virgin Australia.”
Singapore Airlines is upbeat on Vistara, which it owns 49% of. “Vistara is well-positioned for recovery post COVID-19 and we remain committed to supporting Vistara in its fleet plans.”
Prior to the outbreak of COVID-19, Vistara was flying short-haul international services and received its first 787 Dreamliner for long-haul flights to unspecified destinations.
Whereas India has high growth but also large price competition, Australia’s domestic market is a duopoly between Virgin Australia and Qantas. Yet as Qantas earned record profits, Virgin Australia posted seven successive losses totalling A$2 billion.
Singapore Airlines took a $116 million hit in the year to March 31, 2019 as it recorded its share of Virgin Australia’s losses. Singapore Airlines in May will report its annual results.
The value of Singapore Airlines’ stake in Virgin has decreased from $490m in 2017 to $315m in 2019.
Singapore Airlines valuation of investment in [+]
Will Horton
Singapore’s sovereign wealth fund Temasek has reportedly expressed interest in taking over Virgin Australia but does not comment on market speculation. Temasek owns 56% of Singapore Airlines.
Singapore Airlines’ third overseas airline investment is Thai long-haul, low-cost carrier NokScoot, which is a joint-venture between Thailand’s Nok Air and Singapore Airlines’ wholly-owned LCC Scoot.
Shareholders were asking Singapore Airlines if proceeds from the rights issue would be allocated to its foreign investments. Asked if it was looking at any further acquisitions, Singapore Airlines said it would “evaluate any opportunity accordingly.”
Singapore Airlines CEO Goh Choon Phong attends a[+]
AFP via Getty Images
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I have been covering airlines and aerospace in Asia-Pacific for 10 years. I am particularly interested in aeropolitics, cross-border investments, partnerships,
Singapore Airlines Has ‘No Obligation’ To Virgin Australia Cash Infusion, Committed To Vistara
Apr 30, 2020,
Singapore Airlines is taking markedly different tones to the future of its investments in Virgin Australia and India’s Vistara. Singapore Airlines says it is “committed” to Vistara but is offering no such assurance to Virgin Australia, which has entered voluntary administration.
“Singapore Airlines has no requirement or obligation to put in capital for Virgin Australia,” the airline told its shareholders ahead of an extraordinary general meeting to raise equity. Singapore Airlines also says it has no loans to Virgin Australia, which it owns 20% of. Virgin Australia has debts of A$6.9 billion, administrators found.
Virgin Australia ownership chart
Will Horton
Australia is a critical source market for Singapore Airlines and low-cost subsidiary Scoot. Australia, along with New Zealand, contributes 20% of Singapore Airlines’ revenue.
Singapore Airlines only highlighted the value of the country and not the airline.
“Australia remains an important market to us and we will evaluate our options in due course,” it said. “It would be too early for us to provide any further comments on the next steps regarding our investment in Virgin Australia.”
Singapore Airlines is upbeat on Vistara, which it owns 49% of. “Vistara is well-positioned for recovery post COVID-19 and we remain committed to supporting Vistara in its fleet plans.”
Prior to the outbreak of COVID-19, Vistara was flying short-haul international services and received its first 787 Dreamliner for long-haul flights to unspecified destinations.
Whereas India has high growth but also large price competition, Australia’s domestic market is a duopoly between Virgin Australia and Qantas. Yet as Qantas earned record profits, Virgin Australia posted seven successive losses totalling A$2 billion.
Singapore Airlines took a $116 million hit in the year to March 31, 2019 as it recorded its share of Virgin Australia’s losses. Singapore Airlines in May will report its annual results.
The value of Singapore Airlines’ stake in Virgin has decreased from $490m in 2017 to $315m in 2019.
Singapore Airlines valuation of investment in [+]
Will Horton
Singapore’s sovereign wealth fund Temasek has reportedly expressed interest in taking over Virgin Australia but does not comment on market speculation. Temasek owns 56% of Singapore Airlines.
Singapore Airlines’ third overseas airline investment is Thai long-haul, low-cost carrier NokScoot, which is a joint-venture between Thailand’s Nok Air and Singapore Airlines’ wholly-owned LCC Scoot.
Shareholders were asking Singapore Airlines if proceeds from the rights issue would be allocated to its foreign investments. Asked if it was looking at any further acquisitions, Singapore Airlines said it would “evaluate any opportunity accordingly.”
Singapore Airlines CEO Goh Choon Phong attends a[+]
AFP via Getty Images
Get the best of Forbes to your inbox with the latest insights from experts across the globe.
Follow me on Twitter.
I have been covering airlines and aerospace in Asia-Pacific for 10 years. I am particularly interested in aeropolitics, cross-border investments, partnerships,
