Wednesday, November 14, 2018

India could clear flight for Singapore Airlines

India could give Singapore Airlines a lift. The $8 billion group posted dismal quarterly earnings. But opportunity may be knocking, as indebted rival Jet Airways comes into play. A deal by Singapore's influential Indian partner Tata would bring newfound clout in a promising growth market.

It was always going to be a difficult first half for the city-state's flag carrier, still in the throes of a turnaround plan. Higher oil prices drove net fuel costs up almost a quarter in the three months to September. Meanwhile, impairments and other charges at part-owned Virgin Australia hit too. The result was a drop of over 80 percent in quarterly earnings, with regional arm SilkAir and low-cost Scoot posting operating losses, too.
True, cut-throat competition in India has pushed ticket prices to the floor and carriers to the wall, from state-owned Air India to top player IndiGo, and loss-making Jet. But it remains one of the world's fastest-growing markets, and an inflection point may be near: Jet, controlled by tycoon Naresh Goyal and backed by United Arab Emirates carrier Etihad, is bleeding and buyers are circling, including the Tatas.
Singapore has a foothold in India through Vistara, but this venture with Tata only has a sliver of the market. If the Indian group - which also has a separate low-cost airline - can win control of Jet, the smaller operations could be folded into it. Singapore could benefit from slots in crowded airports through a stake in the subcontinent's top full-service carrier. It would be far easier too than trying to turnaround sprawling state-owned Air India, which was recently up for sale.
13/11/18 Reuters/Nasdaq