​SIA launches takeover offer for Tigerair

“This is positive for the staff of all the airlines in the SIA Group, including those at Scoot and Tiger”, his email communication added. The national carrier intends to delist and privatise Tiger Airways if the buyout goes through, a press statement said.

The airline is offering Tiger shareholders a price of 0.41 Singapore dollars per share in cash and an option to subscribe for SIA shares at 11.1043 Singapore dollars. The offer may close by December 28 at the earliest.

SIA’s chief executive Goh Choon Phong said: “Tigerair’s success is closely linked to it being part of the SIA group through our portfolio strategy, in which we have investments in both the full-service and low-priced aspects of the business”.

SIA’s airlines carried a total of 15.04 million passengers in the first half, up 1.4% year-on-year, while load factors averaged 80.0%, up half a percentage point. Goh, however, ruled out a merger between Tiger and Scoot at this time. Even though lower oil prices are giving the aviation industry a few breathing room, competition is still tight, as reflected in the latest financial results. Singapore Airlines will fund the offer through internal cash resources.

Scoot is launching Singapore-Hangzhou on 25-Oct-2015, taking over a route previously served by SIA full service regional subsidiary SilkAir. The steep drop was attributed to lower ticket prices set in efforts to increase passenger numbers. Fuel savings would have been larger if not for the losses derived from a fuel hedging contract commitment made earlier, when oil prices were at historically high levels. Yields, or money earned from carrying travelers each kilometer, rose 8.2 per cent to 6.6 cents, and it filled 84.12 per cent of its seats in the quarter.

Singapore Airlines posted profit that more than doubled after adding Tiger Airways’s earnings into its own account.

Despite the rising profits, SIA provided a cautious outlook for the remainder of the year, citing uncertain economic conditions and China’s slowing economy as potential areas of concern.

Singapore Airlines shares have fallen 3.9 percent this year, while Tiger Airways climbed 17 percent.

Both companies called for a trading halt Friday pending the announcement.