Markets and Investing
AVIATION | Staff Reporter, Singapore

SIA willing to sell its 49% stake in Virgin Atlantic as it cashes in to fund budget startup

SIA's stake could be worth $1 billion or more, so if sold, this would be a substantial gain for the Group, says DBS.

Virgin Atlantic is quite an interesting acquisition target as it has 288 slots at the Heathrow Airport.

Here's more:

In the Business Times today, CEO Goh Choon Ping was quoted as being open to offers for SIA's 49% stake in Virgin Atlantic. SIA paid over 600m pounds more than 10 years ago for its stake and we believe most of this investment has already been written off on its books.

Thus, if they were able to sell it at a decent price, it could represent a fairly handsome gain for the carrier (and bolster its cash further).

SIA's stake in Virgin Atlantic could be worth c. S$1bn or more or S$0.80 per share so if this could be sold, it would represent a fairly substantial gain and cash inflow for the Group. However, a sale of Virgin Atlantic has always been talked about so until it becomes reality, we don't think that the
market will be too excited.

Virgin Atlantic is not very profitable at best although it makes for an interesting acquisition target because of the number of slots it has (288 slots or 3% of total) at the always busy Heathrow Airport. Maintain Buy; TP: S$17.00  

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