SIA slips amid aviation turbulence; OCBC launches exit offer for rest of Great Eastern shares

Straits Times

4 hours ago

SINGAPORE – Singapore Airlines (SIA) fell nearly 2 per cent last week, closing at $6.94 on June 13, amid a turbulent week for the aviation sector.
On June 11, Australian carrier Qantas announced it would shut down its Singapore-based budget airline, Jetstar Asia, citing rising supplier costs, airport fees and regional competition. The low-cost carrier, which will cease operations on July 31, had been projected to incur an operating loss of A$35 million (S$29.1 million) this financial year.
In response, SIA Group said it would create positions for around 100 pilots and 200 cabin crew across its airlines to accommodate affected Jetstar Asia staff.
The group, which reported a $2.8 billion profit for the 2025 financial year, had earlier announced bonuses equivalent to 7.45 months for SIA staff and 4.76 months for Scoot staff.
SIA is also considering increasing flight frequencies to key Jetstar Asia destinations such as Okinawa in Japan and Labuan Bajo in Indonesia.
Jetstar Asia currently operates 16 routes and 180 weekly flights out of Changi Airport, having carried about 2.3 million passengers in 2024, or around 3 per cent of the airport's total traffic. Its closure will affect about 500 employees.
The following day, on June 12, the aviation industry was further shaken by the crash of Air India Flight AI171. The aircraft, en route to London from Ahmedabad, India, crashed minutes after take-off, killing 241 people on board, leaving a sole survivor.
SIA holds a 25.1 per cent stake in Air India, following a merger between the Indian flagship carrier and Indian airline Vistara in November 2024. Before the merger, Vistara was jointly owned by Tata Sons and SIA.
Analysts noted that while the crash may temporarily dampen consumer sentiment and weigh on Air India's near-term earnings, the long-term impact is expected to be limited.
On June 13, geopolitical tensions added to the sector's headwinds when Israel launched air strikes on Iran, targeting nuclear and military sites and killing senior commanders. Tehran responded with retaliatory attacks.
The escalation spurred a sharp jump in oil markets, with Brent crude futures surging as much as 13 per cent – the largest intraday move since March 2022 – to US$78.50 a barrel before partially retreating.
Volatile oil prices have a direct impact on airlines, as jet fuel is one of their largest operating expenses. SIA uses a fuel hedging policy to manage the volatility of oil prices, its largest operational cost.
OCBC launches exit offer for Great Eastern
OCBC dipped last week, closing on June 13 at $16.06, down 1.4 per cent through the week.
The bank on June 9 launched its exit offer for the remaining 6.28 per cent in Great Eastern (GE) that it does not own at $30.15 per share in cash, or $900 million in total, in another attempt to take the insurer private.
OCBC's revised offer, priced at a 17.8 per cent premium over its initial offer of $25.60 per share in May 2024, is nevertheless conditional upon 75 per cent of GE's remaining shareholders voting in favour of the insurer's delisting at an extraordinary general meeting to be held on July 8.
The offer opens on June 16 and closes on July 22 with no extensions. OCBC will not be able to vote.
In its exit offer letter, OCBC explained that its 'strategic intention' is for GE to delist and to take the insurer private, as it sees GE as 'a key enabler' for the bank to capture rising Asian wealth.
It added that the exit offer is an opportunity for it to 'deploy capital to generate higher shareholder returns while reinforcing its strategy of integrating banking, insurance and wealth management'.
An exit offer will also help GE solve the months-long impasse over suspension in the trading of its shares.
The insurer's shares have been suspended from trading for 11 months since July 15, 2024, after OCBC acquired about 93.7 per cent of the company through its previous $25.60 per share offer. With GE no longer meeting the 10 per cent free float requirement, OCBC, at the request of GE, is now seeking to resolve the prolonged suspension through the delisting and subsequent exit offer.
If the delisting vote fails, shareholders must then vote on whether GE's shares should resume trading. This resolution also requires 75 per cent approval.
OCBC will be able to vote on this resolution and will accept a new class of shares that will dilute its stake in GE to just over 88 per cent, enabling GE to meet free float requirements and continue trading.
Should shareholders vote in favour of the delisting, they should note that while the appointed independent financial adviser, Ernst & Young (EY), has assessed OCBC's offer as fair and reasonable, the exit offer is below GE's embedded value of $38.08 per share as at end-2024.
It also sits at the lower end of EY's fair valuation range of about $28.87 to $36.19 per GE share, derived during the previous offer.
If shares of GE resume trading, there will be a much smaller market for its shares and no guarantee that the stock will trade at its fair value. As at March 5, there were just 838 GE shareholders compared with 3,466 a year ago.
An exit offer will help Great Eastern solve the months-long impasse over suspension in the trading of its shares.
ST PHOTO: KUA CHEE SIONG
Other market movers
Boustead Singapore surged 6.4 per cent to $1.33 on June 13, after it announced that it is conducting strategic reviews for a potential sale of a stake in some of its logistics and industrial real estate assets to a real estate investment trust (Reit), with plans to list the Reit on the mainboard of the Singapore Exchange (SGX).
The engineering and technology group said on June 12 the review is part of its 'ordinary course of business to periodically consider options and opportunities' in relation to its investments to unlock shareholder value, and there is no certainty that any transaction will materialise as a result of this process.
Shares of Centurion hit an all-time high of $1.55 on June 12, following an announcement that it had submitted a listing application for a Reit to the SGX and Monetary Authority of Singapore.
Centurion said the application is still under review and the details of the initial public offering (IPO) are still being finalised. It noted that the Reit it is aiming to establish will comprise some of its worker and student accommodation assets. Its shares closed on June 13 at $1.49.
Shares of Ho Bee Land are up by over 10.4 per cent across the week, after its founder and executive chairman Chua Thian Poh increased his stake in the real estate company.
Mr Chua on June 5 acquired 137,900 shares for $248,220, or $1.80 per share, raising his stake in the company to around 75.68 per cent.
Both Mr Chua, 76, and his son Nicholas Chua, 49, who is chief executive officer, have been accumulating shares in Ho Bee over the last few months. The company's shares closed on June 13 at $2.01.
What to look out for this week
CNMC Goldmine shares may see increased trading activity amid ongoing air strikes between Israel and Iran over the weekend. The gold miner's stock rose 4.6 per cent to 46 cents on June 13, when the initial strikes were reported, as investors turned to gold as a safe-haven asset.
Shares of Thakral Corp might also see some movement.
The company said on June 13 after the market closed that its associate, GemLife, has signed an underwriting agreement for its proposed IPO on the Australian Securities Exchange, which is expected to launch 'very shortly'.
The media has reported that GemLife, which operates resorts for seniors, could raise as much as A$750 million in Australia's largest IPO in 2025 after selling 380.3 million shares at A$4.16 each.
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