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Tigerair’s 1QFY14 Operating Loss Narrows To $6.2m

July 24, 2013 Financial No Comments Email Email

Tiger Airways Holdings Limited (“Tigerair”) has reported an operating loss of $6.2 million for the quarter ended 30 June 2013 (1QFY14), compared to an operating loss of $11.8 million recorded in the previous corresponding quarter (1QFY13).

Its total revenue increased 30.3% to $236.2 million, from $181.3 million recorded in 1QFY13.

Revenue improvement was driven by an increase in passenger traffic (+32.6%), but partially offset by lower yield (-1.8%).

Total expenses increased 25.5% to $242.4 million, mostly due to capacity expansion (+30.2%).

Mr Koay Peng Yen, Group CEO, said, “Our operating performance improved during the April to June period as Tigerair Singapore and Tigerair Australia recorded significant increases in traffic volume in spite of a traditionally weak quarter for the air travel industry. However, taking in our share of loss in our associate airlines, Tigerair Mandala and Tigerair Philippines, we ended up with a higher after-tax loss.”

For the quarter ended 30 June 2013, loss after tax widened to $32.8 million compared to $13.7 million recorded a year ago, principally due to a $26.6 million share of losses from associates arising mainly from a reclassification of loans to net investment.

Financial results from Tigerair Australia will be deconsolidated from the Group’s financial statements from the next quarter, as the sale of 60% of Tigerair Australia to Virgin Australia was completed on 8 July 2013. Thereafter Tigerair expects to report a positive operating profit. However, the Tigerair Group also expects losses from its associated airlines, Tigerair

Mandala and Tigerair Philippines, as it continues to strengthen its operations and expand in Indonesia and the Philippines.

Operations Review

Tigerair Singapore registered an operating profit of $5.9 million for 1QFY14, representing a 56.4% increase year-on-year. Revenue grew 16.4% to $160.9 million as a result of higher traffic volume (+22.5%) but partially offset by weaker yield (-4.7%). During the quarter, Tigerair Singapore took delivery of one Airbus A320, bringing its current fleet size to 21 aircraft.

Tigerair Australia’s operating loss narrowed to $17.3 million, compared to a $21.0 million loss recorded in the previous year. Revenue increased 70.2% to $71.0 million, consistent with growth in traffic volume (+68.9%) and stronger yield (+0.8%). Tigerair Australia has a current fleet size of 11 aircraft.

During the quarter, Tigerair re-classified $26.0 million of its shareholder loans to Tiger Mandala as a capital investment, and recognised a $20.6 million share of loss in Tigerair Mandala. Of this, $13.3 million was in relation to losses incurred in earlier quarters which were previously disclosed as unrecognised loss. With this re-classification, there is no unrecognised loss in Tigerair Mandala as at end 1QFY14. Tigerair Mandala took delivery of one Airbus A320 aircraft in May and another in early July 2013. Currently, it has a fleet of nine aircraft and its network covers 16 international and domestic routes.

Share of loss from Tigerair Philippines amounted to $6.0 million for the quarter. There are no unrecognised losses in Tigerair Philippines. Tigerair Philippines has a fleet of five aircraft and a network covering 10 international and domestic destinations.

Outlook

Tigerair Singapore is looking forward to significantly growing its traffic volume for FY14, through new destinations introduced recently and increased flight frequencies on highdemand routes.

Following completion of the sale of a 60% stake in Tigerair Australia to Virgin Australia on 8 July 2013, the financial results of Tigerair Australia will be deconsolidated from Tigerair from 2QFY14. With Virgin Australia as joint-owner, Tigerair Australia will be positioned strongly to expedite its growth plans by having the right backing and scale to compete effectively.

Tigerair Mandala continues to build its market presence in Indonesia through domestic and international network expansion as more aircraft are progressively added to its fleet. With its current fleet of nine aircraft, the airline is well-placed to build its brand in the Indonesian market in the coming quarters.

Tigerair Philippines continues to expand its route network and also tap on the Chinese market with charter opportunities. The airline is also increasing more international flights to Singapore and Thailand.

Tigerair has made significant strides in its operations and service in the recent year, and is the largest budget carrier in Singapore. It is also Singapore’s second largest airline. The recent brand refresh marks a significant milestone, as a rejuvenated Tigerair unveils its warm, passionate and genuine personality. The new brand positioning was launched simultaneously by the four Tigerair airlines in Singapore, Australia, Indonesia and the Philippines. The new Tigerair will continue to invest in new initiatives to enable travel a stress-free affair for customers, and aims to be the leading airline and travel partner connecting people across Asia Pacific.

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