SIA finally gets the VA monkey off its back

SIA finally gets the VA monkey off its back
Above photo is With Virgin no more a subsidiary of SIA, it now has an open door to enter the lucrative Asia-Pacific market.

SINGAPORE - Singapore Airlines (SIA) offloaded an underperforming asset, booked a tidy gain and is moving towards refocusing on the high-growth markets in the Asia-Pacific region.

Following weeks of speculation, the airline yesterday announced the sale of its 49 per cent stake in Richard Branson-controlled Virgin Atlantic to US-based Delta Air for US$360 million.

SIA will book a gain of S$117 million for the year ended March 2013 as the carrying value of the investment had been completely written off to retained earnings and reserves.

SIA bought its Virgin stake in March 2000 for £600 million (S$1.6 billion then) expecting the deal to give it a foothold on the trans-Atlantic route via route-restricted Heathrow Airport.

But the investment never paid off as expected and the alliance never got far beyond a code share arrangement and frequent flyer miles.

"We have said for many years that the investment has underperformed, and that we would consider offers for the stake," said SIA spokesman Nicholas Ionides.

"The synergies that we had hoped for have also not materialised." "

We found a willing buyer in Delta and it was determined that now is an appropriate time to divest our stake."

"There are various commercial arrangements in place and these are expected to remain in place after the divestment. We have not received dividends from our ordinary share capital since investment."

Another sore point for SIA was the fact that Mr Branson and his team never allowed it to have a voice in Virgin's management.

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