Singapore Air Ends Talks on Equity Investment in Jeju AirKyunghee Park
Singapore Airlines Ltd. ended talks to buy a stake in South Korea’s Jeju Air Co., almost five months after it announced it was considering an investment in the budget carrier.
“Discussions have now ceased,” Singapore Air said in a statement to the stock exchange Thursday. “The parties will not be proceeding with a transaction.”
Singapore Air has been expanding in Australia, Thailand and India in response to competition from budget airlines that are growing their market share in Southeast Asia. An investment in Jeju Air would have given it more access in North Asia, including China.
“You’ve got to tap into the growth-potential markets, and in Asia that’s China and India,” K. Ajith, a Singapore-based analyst at UOB-Kay Hian Pte. “North Asia could be quite a weak market for Singapore Air.”
The statement from Singapore Air didn’t say why it had decided not to follow through on the investment. In a regulatory filing in Seoul, Jeju Air parent AK Holdings Inc., part of the Aekyung Group, said Jeju Air had decided not to consider Singapore Air’s equity investment proposal.
Singapore Air has been looking to build alliances outside the city-state as part of a multihub strategy. The carrier partnered with India’s Tata Group to start Vistara in January, and owns about 23 percent of Virgin Australia Holdings Ltd. Singapore Air’s Scoot unit teamed up with Nok Airlines Pcl of Thailand to set up NokScoot.
Singapore Air said in March it was in discussions on a possible equity investment in the South Korean budget carrier. Jeju Air had said last year it was planning an initial public offering and was looking for a partner to help grow the business.
Shares of Singapore Air fell 0.2 percent Thursday to S$10.18 and are down 12 percent so far this year.
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