Tiger Airways Returns to Profit

Tiger Airways Holdings Ltd. returned to profit in the quarter ended December after six consecutive quarters of losses, but the Singapore-based budget carrier flagged a tough few months ahead as demand for air travel enters a seasonal slowdown.

Asia's budget carriers have fared better than full-service airlines in recent years as the global economic slowdown pushed many small and medium-sized companies to look for cheaper travel options. But Tiger has battled losses because its Australian unit, which accounts for a third of its fleet, was grounded by the regulator in July 2011 for six weeks on safety concerns and only gradually allowed to resume full flight operations.

Koay Peng Yen, Tiger's group chief executive, said it was too early to say whether the airline will report a profit or loss in the final quarter of the current fiscal year.

"Our (fiscal) fourth quarter has just begun. But we expect it to be weaker," Mr. Koay told reporters in a conference call after the results were announced. Tiger has been "encouraged" by the turnaround in the fiscal third quarter and will make efforts to keep up the recovery momentum, he said.

In a disclosure to the Singapore stock exchange, Tiger said it expects to report an operating loss for the fiscal year ending March 31, citing a net loss in the first nine months of the year of 30 million Singapore dollars (US$24.4 million). It reported a net loss of S$87.9 million in the same period of the previous fiscal year.

Tiger, in which Singapore Airlines Ltd. owns a 32.7% equity stake, swung to net profit of S$2 million in the quarter ended Dec. 31 from a S$17.4 million loss a year earlier, after passenger traffic improved and the carrier better utilized its aircraft fleet. Revenue rose 47% to S$248 million. It was the company's first profit since the quarter ended March 2011.

The September-to-December period is traditionally the strongest quarter for air travel because of holidays, which helped Tiger Airways, Mr. Koay said.

Tiger's passenger load factor climbed to 85% in the fiscal third quarter, compared with 79% in the same quarter of the previous year.

Losses at Tiger's Australian unit widened 50% from a year earlier to S$12.9 million, as it struggled to recover from the costly flight suspension in 2011.

Tiger has been trying to repair its image in Australia, where it has 11 Airbus A320 jets. Its flight operations have since returned to the level before the suspension, Mr. Koay said.

The company will seek shareholder approval for a proposed sale of 60% of Tiger Australia to Virgin Australia Holdings Ltd. on Jan. 31, he said, adding that he expects shareholders to approve the transaction. The companies had announced the deal—worth 35 million Australian dollars (US$36,800)—in October last year, but it needs shareholder and regulatory approvals.

Earlier this week, India's SpiceJet Ltd.reported it returned to profit in the quarter ended December as it benefited from lower competition. Southeast Asia's biggest budget carrier AirAsia Bhd, which said earlier this week that it has dropped plans for a Singapore-based airline unit, has yet to report its earnings for the October-to-December quarter.

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Good news for Tiger Airways, posting its first quarterly profit since March 2011. It's been a rough ride, but things are only getting better for the airline. The sale of 60% of Tiger Australia will hopefully help the group to bleed less. Tiger mandela and SEAir has alot of room to expand and improve.