SIA not securing majority stake in Virgin Australia

SINGAPORE Airlines (SIA) said on Friday it has not been considering a majority stake in Virgin Australia (VA), after recent reports said the Republic's national carrier was aiming to acquire a 51 per cent stake in the Australian airline.

SIA also said an independent VA is best for its interest in the Australian market.

In a statement, Nicholas Ionides, divisional vice-president of public affairs at SIA, said: "SIA wishes to put on record that it has not contemplated taking a majority stake in Virgin Australia."

"SIA's interests in the Australian market - as well as in Virgin Australia itself - are best served through an independent Virgin Australia," he added.

SIA was responding to swirling speculation that it was looking to strengthen its grip on VA, after it unveiled outcomes of a capital structure review last week.

VA had said last week it intends to "raise equity of approximately A$852 million through a proposed fully underwritten one-for-one non-renounceable pro-rata entitlement offer to shareholders at a price of A$0.21 per share".

SIA and other current stakeholders have made commitments to take up their pro-rata entitlement.

"This could increase SIA's shareholding to a maximum of 25.9 per cent, should other Virgin Australia shareholders not take up their entitlements," said Mr Ionides. SIA currently holds 20.09 per cent.

Following the announcement from VA, the Centre for Aviation said "SIA was understood to be moving towards securing a 51 per cent holding in Virgin Australia when it was blindsided by the HNA (Hainan Airlines) deal; that no longer seems a realistic option and perhaps puts an end to SIA's longstanding aspirations to own a dominant minority of the Australian market".

Over the past few weeks, two new major shareholders from China staked their claim on VA after current stakeholder Air New Zealand said it would relinquish its holding in VA. Hainan Airlines joined in the fray in late May, staking a 13 per cent claim.

This pushed SIA's stake 23.1 per cent down to 20.09 per cent, Etihad Airways' 25.1 per cent to 21.8 per cent and Air New Zealand's 25.9 per cent to 22.5 per cent.

Air New Zealand then sold some of its shares - a 19.98 per cent claim - to Chinese conglomerate Nanshan Group.