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.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales. She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
