Tiger Air

Singapore Airlines (SIA) has made an offer to buy the rest of the shares of its Tiger Airways’ subsidiary for $729m (S$1.2bn).

Currently Singapore Airlines owns 55.8% of Tiger Airways.

Singapore Airlines said in a statement: "SIA’s objective for the offer is to derive enhanced commercial and operational synergies through a full integration of Tiger Airways into the SIA Group.

"SIA believes the offer will benefit shareholders of both Tiger Airways and SIA."

SIA said it opened the option to privatise the carrier because it ‘lacks the scale and network’ to compete with its rivals, including Malaysia’s AirAsia, Qantas’s Jetstar unit, Indonesia’s Lion Air and Philippine airline Cebu Pacific, reported Reuters.

"SIA believes the offer will benefit shareholders of both Tiger Airways and SIA."

For the buyback plan, SIA is offering the price of S$0.41 per Tiger Airways share in cash to its shareholders.

Tiger Airways’ shareholders will be able to subscribe for Singapore Airlines shares at S$11.1043 per share.

SIA CEO Goh Choon Phong was quoted by Channel NewsAsia saying: "Tiger Airways’ 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-cost aspects of the business."

The CEO said Tigerair has ‘done well’ in its restructuring to improve its financial position, but its ‘development potential is limited without deeper integration with the SIA Group to build a strong foundation for growth over the long term.’

SIA also said Tiger will benefit from the offer by merging itself with SIA’s other long-haul, low-cost carrier Scoot and full-service regional airline SilkAir.

In 2004, Tiger was formed by SIA and Singapore’s national investment firm Temasek. The carrier operates Airbus A320s.

In 2014, SIA became its majority shareholder.

Image: Singapore Airlines has made an offer to buy the rest of the shares of Tiger Airways. Photo: courtesy of Airbus.