Tigerair has signed a deal to sublease 12 of its surplus aircraft to the Indian budget carrier IndiGo. In a news release on Thursday (Oct 9), Tigerair said this will help the budget carrier "reduce excess capacity significantly and hence lower related leasing cost".
Most of the aircraft were previously operated by Tigerair Philippines and Tigerair Mandala which were either sold or folded earlier this year. The aircraft will be subleased to IndiGo for a period of between three and four years and Tigerair expects the agreement to reduce its cash flow burden by S$162 million over the sublease periods.
The Singapore-based airline has been struggling to turn in a profit. It booked a net loss of S$65 million for the quarter ended in June 2014.
In its news release, the budget carrier said its liquidity "remains at a healthy level", but that it would be reviewing various funding options, including the possibility of a rights issue to strengthen its balance sheet.
"The sublease agreement resolves our excess capacity issue and puts us in a better position to focus on our Singapore operations. We will actively explore options for the placement of the surplus aircraft subsequent to their return from IndiGo," said Mr Lee Lik Hsin, Group CEO of Tigerair.
The budget carrier has taken other steps as part of its turnaround blueprint. These include the sale of 'non-performing cubs' and cancellation of nine aircraft ordered in 2007, and due for delivery this year or the next. Tigerair will continue to review its network operations and may trim its fleet by a further two to four aircraft if need be, the release added.
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