ANDREW DOYLE / SINGAPORE
Split-up could eventually lead to more windfall payments for airlines, perhaps as early as 2004
Air transport industry information technology co-operative SITA is to accelerate efforts to spin off its non-network-related businesses into a separate company, clearing the way for outside investors to help fund expansion.
The move could lead to more windfall payments for Brussels-based SITA's airline stake holders if shares are divested in a similar way to the earlier split-off of the organisation's global communications network. The network was spun-off creating Equant, putting shares worth several billion dollars into the hands of airlines and other air transport industry companies. Several carriers were forced to sell Equant shares to prop up their finances during the last Asian economic downturn.
The transfer of SITA's IT applications businesses into the specially created SITA INC (Information Networking Computing) is unlikely to prove as lucrative, but should enable airlines to maximise the value of their shareholdings by allowing outside investors to fund its ambitious growth plans. It is understood that shares in SITA INC could be sold as early as 2004.
The decision to bring forward the target date for the transfer was taken at a SITA board meeting in Singapore on 6 September. Up to 90% of the earmarked activities should be incorporated into SITA INC by the end of this year, says the applications businesses chief operating officer Ian Riddell.
The activities being transferred encompass airport desktop PC solutions, passenger services, logistics and aircraft operations, communications, engineering and maintenance. Together they represent around 40% of SITA's annual revenues but account for some 70% of staff. SITA INC is also looking to make further acquisitions as part of its expansion strategy.
The SITA co-operative will be left with responsibility only for managing access by its members to the Equant communications network.
Meanwhile, SITA director general John Watson says the organisation will not sink additional capital into its aerospan.com e-business exchange until it is satisfied it can earn an adequate return on its investment. Industry participation in such e-marketplaces has not lived up to initial predictions and a further round of consolidation in the sector is expected.
Source: Flight International
