Singapore Airlines (SIA) is planning to spend up to S$1 billion ($586 million) on a share buy-back that may signal a departure from the carrier's strategy of directing its capital reserves towards airline purchases. Cash-rich SIA has in the past year pursued stakes in China Airlines, South African Airways, Thai International Airways and Ansett Australia - but has so far failed to secure a holding in any of its targets.
The share buy-back plan is described as "an integral part" of a planned merger of its foreign and local shares on the Singapore stock exchange. It will take place immediately after the merger is effected.
SIA says the buy-back will allow it to return to shareholders "substantial surplus funds, which are in excess of the foreseeable financial and investment needs of the group".
Analysts believe the move indicates SIA's plan to buy 50% of Ansett - or of its 50% shareholder Air New Zealand - have been dropped. "If you've got S$2.5 billion in the bank, and you spend S$1 billion buying back your own shares, then that would suggest the Ansett deal is dead, at least for another year, "says one.
SIA chairman and chief executive Cheong Choong Kong claims, however, that the carrier is interested in acquisitions and has the cash to fund them. The privatisation of Thai is still planned. Cheong says SIA is eyeing "opportunities" he is "not at liberty to talk about".
The airline says the share merger is aimed at improving share liquidity and allowing demand for shares to be met more efficiently. SIA is also removing a 27.51% cap on foreign shareholding, imposed to ensure compliance with international air services agreements. Singapore's finance minister will instead be granted "golden shares", allowing it to intervene in management decisions and giving it voting control should SIA's operating rights be threatened by the nationality of the shareholding majority. Individual shareholdings will be capped at 5%, other than for government investment arm Temasek Holdings.
• SIA has signed a sale-and-leaseback agreement with Sansome Planes III of New York covering a Boeing 747-400. The eight-year deal is SIA's tenth 747-400 leaseback to date. The airline operates 37 -400s, with six firm orders and 10 options.
Source: Flight International
