Singapore Air seeks bids for Virgin Atlantic stake

By Daryl Loo and Jan Dahinten

SINGAPORE (Reuters) - Singapore Airlines (SIAL.SI: Quote, Profile, Research, Stock Buzz), on Wednesday invited offers for its 49 percent stake in Richard Branson's trans-Atlantic airline Virgin Atlantic VA.UL because the nine-year old investment was giving it poor returns.

Singapore Air, the world's second-biggest airline by market value, bought the stake from British billionaire Branson in 1999 for 800 million pounds ($1.6 billion).

"It's not a secret that we regard it as an underperforming investment. We are still reviewing our plans and are open to all reasonable offers," Singapore Airlines Chief Executive Chew Choon Seng told a results briefing.

"But as they say in classified ads: No timewasters, please."

State-controlled Singapore Airlines had hoped that the investment would provide it with both a financial return and better access to routes. It is not losing money on the stake.

Branson, a master of the publicity stunt, said last August that Virgin Group, his airlines-to-music group, may buy back the stake held by Singapore Air. The conglomerate has a right of first refusal and would be willing to match any offers for it, Branson had said.

Chew said Singapore Airlines faced no shareholder pressure to cut its stakes in aircraft maintenance firm SIA Engineering (SIAE.SI: Quote, Profile, Research, Stock Buzz) and groundhandling firm Singapore Airport Terminal Services (SATS) (SIAT.SI: Quote, Profile, Research, Stock Buzz) but was reviewing those holdings at regular intervals.

"Both are still profitable, sustainable businesses and are adding value to the group. And therefore there is no pressure on us to reduce our holdings."