Search

NEWS
AVIATION | Staff Reporter, Singapore
Published: 07 Dec 12
331 views


Delta eyes SIA's 49% stake in Virgin

One man’s meat is another’s poison.

According to Maybank Kim Eng, Singapore Airlines announced recently that they are looking to divest their 49% stake in Virgin Atlantic (VA), an investment they made for GBP600m some thirteen years ago.

Here's more from Maybank Kim Eng:

While the news itself wasn’t a big surprise, it was intriguing to see a wide range of offer prices quoted by news publications, from SGD200m (The Business Times) to ~USD1.2b (Bloomberg, CNBC).

Both quoted Delta as the alleged interested party. Our take: fair value is likely to be closer to SGD1b, and this could result in an attractive special dividend.

One man’s meat, another’s poison. SIA’s investment in VA has been undermined by Richard Branson’s unwillingness to accede control of the airline to SIA, as well as the inking of a Singapore-UK agreement allowing SIA to fly the trans-Atlantic route from Britain.

This transAtlantic route and prized landing slots at London’s Heathrow are exactly what Delta is after: a lucrative market for premium passengers.

Our view on Virgin’s worth: ~SGD1b. We did a simple comparison with International Airlines Group (IAG), parent of British Airways, Iberia and BMI, to make an educated guess on a fair value for VA’s business.

Sale could result in 8% special dividend yield. SIA has a muchvaunted net cash pile of close to SGD4b, which likely means any significant cash proceeds from a VA sale could be distributed to shareholders via a special dividend. SGD1b in cash proceeds would translate to ~SGD0.85 / share, or a potential 8% yield. Fundamentally, our HOLD call on SIA is maintained, still premised on a neutral outlook for the aviation sector. But things could start to look interesting for SIA.

Potential special dividend if cash sale goes through. Our VA valuation suggests an attractive special dividend should a cash sale be sealed. We do list two criteria for investors to watch for: confirmation of the transaction which is in-line or even exceeding our SGD1b estimates, and for the deal to be paid in cash. 



Sign up for our newsletter

 

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

To get a media kit and information on advertising or sponsoring click here.

Tags: SIA's stake in Virgin, Delta

LATEST AVIATION JOBS »
PRINT ISSUE »

Subscribe Now
What factors are keeping expats rooted in Singapore?

993 views

What factors are keeping expats rooted in Singapore?

576 views

Can Asian private equity outgrow the west?

245 views

MOST READ EXCLUSIVES

16 items that are a tad cheaper in Singapore than in Hong Kong

16 items that are a tad cheaper in Singapore than in Hong Kong

Coffee lovers need not go farther for a cheaper cup of cappuccino.

by KRISANA GALLEZO
20 Mar 2015 | 99256 views
 

The 10 richest Singaporeans

The 10 richest Singaporeans

Altogether, their total amount of wealth dropped by 20% to US$32.5 billion.

by KRISANA GALLEZO
13 Apr 2015 | 97746 views

Singapore’s 8 hottest 40 and under hotel chefs

Singapore’s 8 hottest 40 and under hotel chefs

Check out and be inspired from their humble beginnings before rising the ranks.

by KRISANA GALLEZO
27 Mar 2015 | 13405 views
 

Chow Tai Fook opens second store in Singapore

Chow Tai Fook opens second store in Singapore

It's a 1,000-square feet new jewellery shop on Orchard Road.

by KRISANA GALLEZO
26 Feb 2015 | 12267 views

This is a woman’s world: CRIB launches Singapore’s first business and lifestyle incubator for women

This is a woman’s world: CRIB launches Singapore’s first business and lifestyle incubator for women

Find out what the three key platforms of CRIB are.

by KRISANA GALLEZO
10 Mar 2015 | 8168 views
 

The New Black hits Singapore with rarest green coffee

The New Black hits Singapore with rarest green coffee

It also boasts of its Impossible Collection curated by the ‘world’s rockstar roasters'.

by KRISANA GALLEZO
5 Mar 2015 | 4788 views

Too many business cards? Why don’t you try Sansan’s business card management service?

Too many business cards? Why don’t you try Sansan’s business card management service?

After Singapore, this contract management company plans to expand in the APAC region.

by KRISANA GALLEZO
12 Feb 2015 | 4412 views
 

Check out this integrated office cum lab of Friesland Campina in Singapore

Check out this integrated office cum lab of Friesland Campina in Singapore

A curved glass wall resulted in a 90% open-plan office.

by KRISANA GALLEZO
17 Feb 2015 | 4382 views

Spencer Ogden gets funky with its newest trademark space in Singapore

Spencer Ogden gets funky with its newest trademark space in Singapore

The company invested over $1M to make this signature office possible.

by KRISANA GALLEZO
5 Feb 2015 | 3500 views
 

Want to be hands-on with your ideal home setting?

Want to be hands-on with your ideal home setting?

Commune is opening an Experience Centre for meticulous homeowners.

by KRISANA GALLEZO
23 Mar 2015 | 2914 views

Office in the sky: How’s having a meeting in the clouds?

Office in the sky: How’s having a meeting in the clouds?

Check out ACL Asia Pacific’s Cumulonimbus, Altostratus and Cirrus rooms.

by KRISANA GALLEZO
1 Apr 2015 | 2781 views
 

Lazada Singapore CEO Martell Hardenberg talks about his “Happy Customer” philosophy

Lazada Singapore CEO Martell Hardenberg talks about his “Happy Customer” philosophy

Find out what other goals the 27-year-old has for the company.

by KRISANA GALLEZO
27 Mar 2015 | 2398 views

Take a look inside INSEAD’s $55m leadership development centre in Singapore

Take a look inside INSEAD’s $55m leadership development centre in Singapore

It marks the fulfillment of a vision too ambitious to achieve 15 years ago.

by KRISANA GALLEZO
1 Apr 2015 | 2320 views
 

LawCanvas saves the day: Easy legal documents in under a minute

LawCanvas saves the day: Easy legal documents in under a minute

The founders revolutionized the legal industry despite having different backgrounds.

by KRISANA GALLEZO
2 Mar 2015 | 2318 views

PocketMath makes buying mobile ad impressions easier

PocketMath makes buying mobile ad impressions easier

It integrates over 20 ad exchanges and offers over 20B impressions a day.

by KRISANA GALLEZO
9 Feb 2015 | 1776 views
 

#OnTheContrary campaign reveals the ‘real struggles’ of entrepreneurs

#OnTheContrary campaign reveals the ‘real struggles’ of entrepreneurs

Rags to riches stories are fabulous, but here’s the real deal.

by KRISANA GALLEZO
27 Mar 2015 | 1020 views

Find out what it’s like going into business with your in-law

Find out what it’s like going into business with your in-law

A young entrepreneur teamed up with his father-in-law to redefine home entertainment needs.

by KRISANA GALLEZO
27 Mar 2015 | 779 views
 

What is the future of the sports business in Singapore?

What is the future of the sports business in Singapore?

Can a new billion-dollar stadium give Singapore the edge it needs to compete for world-class sporting events?

by STAFF REPORTER
20 Mar 2015 | 696 views

Fragrance Du Bois to launch a new scent this year

Fragrance Du Bois to launch a new scent this year

Also, check out its pop-up boutique at TANGS Orchard open until April 26.

by KRISANA GALLEZO
17 Apr 2015 | 424 views
 
close Don't Show Again

STAY INFORMED! Get our free weekly newsletter