Tuesday, October 30, 2012

Singapore Airlines buys 10% stake in Virgin Australia


SYDNEY: Virgin Australia on Tuesday sold 10 per cent of its business to Singapore Airlines while agreeing to buy a 60 per cent stake in Tiger Airways Australia as it upped the ante in its battle with Qantas. In a slew of announcements, the country's second-biggest airline after the Flying Kangaroo also said it was making a A$98.7 million (US$101.9 million) takeover offer for Perth-based Australian regional carrier Skywest.

Virgin agreed to pay A$35 million (US$36 million) for its holding in Tiger, the loss-making subsidiary of Singapore's Tiger Airways, while Singapore Airlines bought its stake for A$105 million. "The transactions overall represent a monumental shift for Virgin Australia which, if approved, will see a more even playing field in Australian aviation," Macquarie analysts said in a note. "They arguably create a replica of Qantas." Virgin chief executive John Borghetti said the deals were designed to accelerate the airline's growth and increase competition in Australia, where the domestic market has long been dominated by Qantas.

The acquisitions of Tiger and Skywest would boost Virgin's presence in the budget and regional markets, "enabling us to fast-track our expansion in these areas and become a stronger competitor".

"These transactions will bring important benefits to Australia, driving growth in jobs, tourism and competition," said Borghetti, adding that he planned to make the carrier Australia's "airline of choice in all markets".

If the Tiger and Skywest deals receive regulatory and shareholder approvals, Virgin will expand its fleet to 139 aircraft and employ more than 9,000 workers.
Australia has a lucrative domestic market and global airlines have been deepening ties with local carriers to access it.

Last month, Qantas and Emirates announced a major global alliance which opens up Qantas's domestic network of more than 50 destinations and nearly 5,000 flights per week to the Dubai-based airline.
Singapore Airlines is a key international competitor to Qantas and CEO Goh Choon Phong said his company taking a stake in Virgin showed "our shared commitment to an alliance that provides a wide range of consumer benefits".

"Singapore Airlines fully supports the ongoing transformation of Virgin Australia, which has already resulted in a more competitive aviation market in Australia," he added.

The Singaporean airline, which paid 42.88 cents a share for an issue of 245.6 million stock, a 6.8 per cent discount to the last trading price, joins Etihad which also has a 10 per cent stake in Virgin.

Richard Branson's Virgin Group and Air New Zealand are other major equity holders.

Borghetti described Singapore Airlines as "an important strategic alliance partner".

"We are very pleased to have their support as an investor," he said.

In the Skywest deal, Virgin made a cash and scrip offer for the airline that operates in regional Australia and Southeast Asia.

Skywest executive chairman Jeff Chatfield said the offer represented a substantial premium to the current share price.

"Based on our advice it is likely that this proposal will take some months to fully play out," he said in a statement.

"Maybe the profit contribution from Virgin Australia may not mean that much, but Virgin Australia can help Singapore Airlines maintain a very strong hold on the Australian market in terms of generating feed from Australia, and that does have a big impact on Singapore Airlines," said Leithen Francis, the editor of Aviation Week.

- AFP/fa/ck/xq


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Roller coaster week for aviation don't you think so? And much of the news being associated with SIA. This move by them makes me feel that they don't want to waste too much time and money into Tiger Australia. What do you think? Now that the Tiger Australia fleet will be expanded by Virgin instead, to 35 by 2018 from the current 11.

Does this mean the A320 orders made by Tiger Holdings will mostly go to the Singapore base, with a number heading to Tiger Mandela? I guess it's a way Tiger Holding achieve a better balance in the books since the Australia base has been pulling down the profits into the red zone.


Friday, October 26, 2012

Singapore Airlines to order more A380s and A350 XWBs



Singapore Airlines (SIA) has announced that it will order 25 more widebody aircraft from Airbus, comprising five double deck A380s and 20 A350-900s. The aircraft will be operated on the carrier’s long range and regional services, offering maximum comfort and efficiency for high density and medium capacity routes.

The latest A380 order will be the third to be placed by the airline, bringing the total number of A380s ordered by SIA to 24. The airline, which was the launch operator for the A380, now has 19 aircraft in service, flying to 10 destinations in Europe, the US and the Asia-Pacific region from its Singapore base. In the mid-size category, the new A350 XWB order will see the airline double its backlog for the all-new aircraft to 40. The A350-900s will be used by the airline on both medium and long haul routes.

“This major order will provide us with additional growth opportunities and is consistent with our longstanding policy of maintaining a young and modern fleet. It demonstrates our commitment to the Singapore hub, and our confidence in the strength of the market for premium full-service travel,” said Goh Choon Phong, CEO, Singapore Airlines. “The aircraft will enable us to further enhance our network, providing more travel options to our customers. They will also feature the next generation of in-flight cabin products to keep us at the forefront of airline product innovation.”

“This announcement from one of the world’s most prestigious carriers underscores the unrivalled comfort and efficiency offered by Airbus widebody aircraft,” said John Leahy, Chief Operating Officer, Customers, Airbus. “As Singapore Airlines has shown, the A380 has proven itself to be a game changer at the top end of the market. We are now set to bring new levels of efficiency to the mid-size segment with the arrival of the A350 XWB. We are extremely proud to count Singapore Airlines as a leading airline partner on both of these innovative aircraft programmes.”

Since first entering service with Singapore Airlines in 2007, the A380 has joined the fleets of nine world class carriers. Typically seating 525 passengers in three classes, the aircraft is capable of flying 8,500 nautical miles or 15,700 kilometres non-stop, carrying more people at lower cost and with less impact on the environment. The spacious, quiet cabin and smooth ride have made the A380 a firm favourite with passengers, resulting in higher load factors wherever it flies. To date, Airbus has recorded 257 firm orders for the A380 from 20 customers.

 The A350 XWB (Xtra Wide-Body) is an all-new mid-size long range product line comprising three versions and seating between 270 and 350 passengers in typical three-class layouts. The new Family will bring a step change in efficiency compared with existing aircraft in this size category, using 25 per cent less fuel and providing an equivalent reduction in CO2 emissions. Scheduled for entry-into-service in 2014, the A350 XWB has already won 558 firm orders from 34 customers worldwide.

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Surprise surprise!! It was just few days ago I was wondering why isn't SIA making fresh A380 orders and now they spring up with a big news. With the A350 XWB going to SIA, the 20 B787 previously ordered will be passed down to Scoot, who is currently flying four B772ER.

The big news in my opinion isn't about SIA here; it's about Scoot. Being a low cost carrier, using the B787 is really one of a kind, the other LCC going to using it is Jetstar. This shows that SIA really has big plans for Scoot and is willing to invest big money into it. God knows how successful Scoot might become.

Monday, October 22, 2012

SIA freezes hiring of cadet pilots amid business slowdown

SINGAPORE: Singapore Airlines (SIA) said it will freeze the hiring of cadet pilots due to a temporary surplus of First Officers.

In a statement to Channel News Asia, SIA said the company recruits cadets on a three-year lead time basis, and it adjusts cadet recruitment requirements based on its operational environment and other factors such as future aircraft deliveries.

It takes about three years from the time SIA recruits the cadets to the time they become First Officers. The last batch of cadets was recruited early this year.

Analysts Channel NewsAsia spoke to said this was a prudent move by SIA given the current economic uncertainty.

"There have been downturns in the past where SQ has found that it has too many cadet pilots and as a consequence, it has had to retrench cadet pilots or have them go on no-pay leave for lengthy periods of time." said Leithen Francis, an editor at Aviation Week.

"So to avoid a repeat of that situation, I think its prudent that SIA is acting sooner rather than later, by temporarily halting recruitment of cadet pilots. After all, the global economic situation still remains unclear," he added.

SIA denied that the move was linked to a decline in the demand for travel, as reported in The Straits Times newspaper on Monday. SIA also said it has no plans to move its pilots to its regional arm, SilkAir or budget offshoot, Scoot.

News of the hiring freeze comes a week before Singapore's national carrier announces its earnings results for Q3 2012 next Friday.
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In actual fact, the cadet pilot job ad has been taken down since November 2011. I applied for the cadetship in August 2011 for the second time after my first round failure in July 2010, but was never called. Now it seems that SIA cadets and junior pilots are going to have a rough time.

It was only earlier this year that SIA came up with the voluntary no-pay leave for up to two years. The earlier Europe and USA recover from the economic slowdown, the better it is for aviation as a whole. As for SIA, times have changed and perhaps some rethinking needs to be done now that other major airlines like Emirates and Qatar Airways are picking up real fast. Something is going amiss when SIA stops ordering for planes yet Emirates is pushing for massive A380 orders.