SIA's looking to sell it, Sir Branson wants it back: the 49% stake that Singapore Airlines has in Virgin Atlantic - that has long been a dog in SIA's earnings reports - may finally get a one way ticket back to the U.K.

I say sell it. give Sir Richard Branson back what he seems to want back. His exact words on the subject: "We will be happy to have a look at their stake should Singapore want to sell it." That to me is business lingo for 'I really want it!' Anytime an executive utters words like that means that they will seriously consider an offer if it is put before them, and, the stars are aligned enough in this case where I think you would see Virgin buy back the stake.

For Singapore Airlines, it is a good move i think because Virgin Atlantic has long been the laggard on the earnings announcements for SIA as of lately, and SIA would make a substantial 'one-off' gain from the sale (most likely more than what they originally purchased the stake for).

SIA's keen interest in China Eastern may signal a shift that they are looking for stakes in airlines in growing markets (such as China), rather than more established markets such as transatlantic flights from Europe to the U.S. where the bulk of Virgin's destinations lie. The stake in Virgin did open up a lot of doors for SIA back when it happened. SIA gained access to key routes from London to east coast destinations in the U.S. that Virgin flew too.

But now, with the recent loosening of the regulation between the U.S. and Europe, competition will increase on routes, tightening margins for airlines. Risky, if you ask me.

All in all, SIA should do it, from a business standpoint it makes sense, and from a strategic standpoint, the Virgin stake just simply isn't working the magic for them anymore like it once used to.

Curtis Bergh

Labels: Richard Branson, Singapore Airlines, Virgin Atlantic