Seoul: Singapore Airlines Ltd is in talks to take a stake in Jeju Air Co Ltd either directly or via the low-cost South Korean carrier`s initial public offering, a Jeju Air spokesman said on Tuesday.
Jeju Air is preparing a fourth-quarter IPO, aiming to be the first listed Korean low-cost carrier.
Its market capitalisation is currently around 700 billion won ($619.30 million) on the over-the-counter market, with shares trading around 10,000 won per share in late August to 31,000 won per share on Tuesday.
Singapore Airlines, Jeju Air and its parent Aekyung Group have been in talks since late last year over the stake sale, the spokesman said, but the size, pricing and timing of the deal remains undecided.
Singapore Airlines, in a stock market filing, confirmed it was in talks with Jeju Air about a possible equity investment.
Jeju Air is 86 percent owned by personal care product-to-chemicals Aekyung Group, including a 70 percent stake owned by the group`s holding company AK Holdings Inc.
Jeju is seeking capital so it can expand its routes to China and other northeast Asian destinations. It also wants to buy the aircraft engines it currently leases to cut long-term costs.
Singapore Airlines, under Chief Executive Officer Goh Choon Phong, is building a portfolio of businesses with high growth potential. The airlines` profits have fallen for the last two years amid high oil prices and competition in the Southeast Asia and the broader Asia Pacific market.
