SIA in talks to sell off Virgin Atlantic stake

Singapore Airlines said Monday it was in talks with "interested parties" on a possible sale of its 49 percent stake in Virgin Atlantic as media reports listed US carrier Delta as a possible buyer.

"Singapore Airlines wishes to announce that it is in discussions with interested parties concerning the possible divestment of its 49 percent shareholding in Virgin Atlantic Limited," the carrier said in a statement.

"These discussions may or may not result in a transaction," it added without naming any of the parties involved in the talks.

Virgin Atlantic was founded by British transport mogul Richard Branson in 1984, with the flamboyant entrepreneur owning a majority 51 percent stake in the airline.

Britain's Sunday Times newspaper identified Delta as one of the interested parties and reported that it had approached SIA directly over the stake, which SIA bought for 600 million pounds (US$962 million) in 1999.

If the sale goes through, Delta's European partner, Air France-KLM, may also buy part of Branson's 51 percent stake which would see him losing control for the airline he founded for the first time, the report added.

Delta was not immediately available for comment.

Virgin Atlantic has over the years offered fewer benefits to SIA, said Timothy Ross, the head of Asia-Pacific transport research at Credit Suisse.

"Virgin contributes very little to Singapore Airlines, they have been unable to generate any real synergies and there's essentially been no marriage of the brands, no leverage of network opportunities," he told AFP.

"The contributions to (SIA's) earnings or to cash flows... has been negligible," he added.

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After more than a decade, SIA calls it quits with Virgin Atlantic. They're probably pulling out of this misadventure in investment considering how negligible it has contributed to SIA's profits over the years. However how much are they able to get out of this sale is a big question mark.

Back in 1999, the sterling pound was much stronger than what it is now and with Virgin Atlantic's lack of cutting edge in the market, the price it is able to fetch may not be desirable. Nevertheless, this sale might be able to draw out from cash for SIA to bring it to better use.