MANILA, Philippines - Singapore-based low-cost carrier Tiger Airways Holdings Ltd. (Tiger) has finalized a sale and purchase agreement to acquire a 40% stake in local carrier Southeast Asian Airlines, Inc. (SEAir).
In a statement, Tiger said its wholly-owned subsidiary Roar Aviation II Pte. Ltd. is buying the stake in SEAir for $7 million from existing foreign shareholders. However, the transaction amount will be less liabilities to be confirmed in a due diligence review.
"We are pleased to welcome a new Cub to our family and look forward to nurturing its growth with our Filipino business partners. The investment in SEAir is in-line with our strategy to develop the business into a pan-Asian one, one that will enable us to leverage on the strength of our Singapore base and scale up the size of our business across the region," said Tiger's chief executive officer Chin Yau Seng, in a statement.
In April, Tiger said it was increasing its 32.5% stake in SEAir to 40%.
Tiger's investment in SEAir is its second joint venture in Asia, after acquiring a 33% stake in Indonesia's Mandala Airlines in January.
"The Philippines is a large country with more than 7,000 islands and a population of over 90 million, not including the 11 million working and living abroad. There is enormous potential to develop the domestic and international air travel," Chin said.
The deal is also subject to certain conditions, including approval by the Civil Aeronautics Board of the Philippines.
Tiger and SEAir have been operating as partner airlines since 2010.
Tiger has operations in Southeast Asia, South Asia, and Australia. Its major shareholders include Singapore Airlines (32.8% stake) and Temasek Holdings (40.1% deemed interest through its controlling stakes in Singapore Airlines and Dahlia Investments).
SEAir operates flights within the Philippines and to international destinations such as Singapore, Hong Kong, Bangkok and Kota Kinabalu. It operates 2 Airbus A319 aircraft leased from Tiger, and plans to add 3 A320 aircraft this year.
SEAir will be introducing new routes to the network as it adopts Tiger's business model.
Last year, the CAB approved the implementation of a new marketing arrangement for the sale, booking and reservation of SEAir’s flights on Tiger’s website using aircraft leased from the latter.
In May 2011, the CAB stopped the implementation of an earlier marketing arrangement as it violated the rules on cabotage, which requires that domestic aviation shall be exclusively undertaken by Philippine carriers. The ban was lifted in October 2011.