Experts believe that Singapore Airlines says Malaysia Airlines tie-up is ‘best’ approach amid hurdles in aviation mergers
Southeast Asia’s airline industry is dominated by loss-making national carriers but domestic politics has made airline mergers a tough sell.
Singapore Airlines (SIA) has set its sights on becoming a more influential player in the region but sees regulatory hurdles getting in the way of Asia’s aviation industry riding the broader trend of consolidation. In the absence of straightforward merger and acquisition opportunities, CEO Goh Choon Phong said he was satisfied his airline’s new Malaysia Airlines (MAS) partnership would make it more profitable.
Singapore Airlines on Tuesday reported stable net income in the first six months of the financial year with profits up 4.9 per cent to S$205.6 million (US$151.3 million).
Citing the MAS deal as the best approach in the meantime, Goh added: “I think until the regulatory environment in this part of the world allows for more liberal consolidation, this will be a good interim solution.”
The global trend towards airlines merging has not extended to Asia, where the domestic political considerations of national governments have made such cross-border mergers and takeovers less feasible, and remain confined within countries and territories.
SIA and financially-troubled Malaysia Airlines have agreed on a wide-ranging partnership that stops short of a full merger, subject to regulatory approvals that Goh said could take a year to finalise.
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