Singapore Airlines (SIA) on Nov 11 announced that it will transfer all its shares in Virgin Australia Holdings (VAH), which comprises some 20% of the issued and paid-up capital in the latter, to BC Hart Aggregator for no consideration.
The SIA Group’s carrying amount of Virgin Australia has been capped at zero. Virgin Australia’s losses of $36.8 million and other comprehensive income of $137.5 million has not been recognised in SIA’s annual report for the FY ended March 31, 2020 because the group has “no obligation in respect of [Virgin Australia’s] losses”.
The transfer of SIA’s Virgin Australia shares is expected to result in a loss on disposal of $24.9 million in the current financial year ending March 31, 2021 due to realisation of reserves largely from foreign currency translation losses which had been recognised in other comprehensive income in previous financial periods.
The transfer of the shares is not expected to have any material effect on the consolidated earnings per share (EPS) or net tangible assets (NTA) of the group for the current FY ending March 31, 2021.
Virgin Australia, on April 21, announced that it had entered into voluntary administration. The administrators appointed by the airline assumed responsibility for its business and operations until July 1, 2020, when BC Hart Aggregator took over economic responsibility.
On Nov 10, the Federal Court of Australia granted permission to the administrators to transfer the shares in Virgin Australia to BC Hart Aggregator. The equity of Virgin Australia was assessed to have nil value in a report by independent experts.
As at 9.02am, shares in SIA were trading 1 cent higher or 0.3% up at $3.92.