Singapore Air forms new company to manage two budget carriers

[SINGAPORE] Singapore Airlines Ltd, seeking to restructure its budget airline business, established a new holding company to manage its two low-fare carriers amid speculation of a consolidation in the region.

Budget Aviation Holdings Pte will control long-haul carrier Scoot and short-haul carrier Tiger Airways, allowing for greater integration and sharing of operations and planning, Singapore Air said in a statement Wednesday.

Lee Lik Hsin, currently chief executive officer of Tiger Airways, will head the holding company and Singapore Air CEO Goh Choon Phong will be chairman.

The new structure comes after Singapore Air, Southeast Asia's biggest airline by market value, took Tiger Airways private by buying out small shareholders following losses racked up by the carrier amid competition and overcapacity.

Earlier this week, eight budget carriers in the Asia Pacific region from Australia to Japan formed a one-of-a-kind alliance, prompting some analysts to speculate the industry is ripe for a consolidation.

"The holding company structure will drive a deep integration of our low-cost subsidiaries, which are important parts of our portfolio strategy," Mr Goh said in the statement.

Mr Goh had said last week that he "can't rule out" a merger between Tiger and Scoot. Both carriers are fully owned by Singapore Air.

Scoot CEO Campbell Wilson will return to the parent company in a senior role, according to the statement.

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