SINGAPORE - Singapore Airlines announced on Friday that it made an offer of S$452.6 million to take over the loss-making subsidiary Tiger Airways Holdings. The announcement came a day after the Singapore Airlines group announced financial results for the quarter ended September, which, though better than market expectations, showed operational weakness in its core business amid increased competition.
Singapore Airlines already owns 55.8 per cent of the budget carrier. The offer aims to take 100 per cent ownership, but if not, at least 90 per cent so the budget carrier can be delisted from the Singapore Exchange. Singapore Airlines will pay Tiger's shareholders $S0.41 per a share, a price 32 per cent higher than Thursday's closing price. The offer may close by December 28 at the earliest.
CEO Goh Choon Phong said that the takeover will give Singapore Airlines "greater ability and flexibility" to integrate the four airlines in the group. Singapore Airlines has 100 per cent ownership of regional carrier SilkAir and the long-haul budget carrier Scoot. The group has been driving increased co-operation among these airlines in areas such as scheduling and mileage services. Goh, however, ruled out a merger between Tiger and Scoot at this time.
The takeover bid is one of the measures Singapore Airlines is using to tackle difficult market conditions. Even though lower oil prices are giving the aviation industry some breathing room, competition is still tight, as reflected in the latest financial results.
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