Tough decisions to shut down loss-making operations and cancel plane orders have paid off for Tigerair, which has posted its first quarter in the black in more than a year.
The news sent the budget carrier's share price soaring six cents or 23 per cent to close at 32 cents.
The airline made a small but significant profit of $2.2 million (S$2.9 million) in the three months ended Dec 31, reversing a $118.5 million loss in the same quarter a year earlier.
The improved numbers reflect the success of the group's initiatives to focus on its Singapore operations in its execution of its turnaround plan, group chief executive officer Lee Lik Hsin said.
"We had to make some difficult decisions in the turnaround process. Though we are not out of the woods yet, we are encouraged by the improving financial results," he said.
Hit by overcapacity in the market with airlines adding more flights than demand could cope with and weighed down by mounting losses, Tigerair offloaded its 40 per cent stake in Tigerair Philippines last year and also shut down its Indonesian associate, Tigerair Mandala.
Tigerair Australia was sold to Virgin Australia.
The group is now left with its Singapore operations and a 10 per cent stake in Tigerair Taiwan - majority owned by China Airlines - which started operating last year.
An order for nine new planes, which were due for delivery last year and this year, was also cancelled.
The focus now is on the Singapore business and boosting ties with partner carriers including Singapore Airlines' (SIA) medium- and long-haul budget arm, Scoot, Mr Lee said during a media teleconference yesterday.
Tigerair, which is about 56 per cent owned by SIA, and Scoot have started coordinating routes and schedules to offer travellers more options and encourage transfers from one carrier to another.
There are also plans to allow booking of each other's flights on their respective websites.
The initiatives should help further boost revenues which improved by 5.9 per cent to $182.3 million between October and December, even as spending fell by 1.5 per cent to $178.2 million.
Quarterly earnings per share was 0.2 cent against a loss of 12.02 cents a year earlier, while net asset value per share was 9.11 cents as at Dec 31, down from 28.25 cents as at March 31 last year.
Analyst Brendan Sobie from the Centre for Asia Pacific Aviation said that while competition remains intense and the December quarter is a seasonally strong period, the airline is in much better shape today.
He said: "Don't necessarily expect profits every quarter from now although, potentially, they should be able to be in the black again overall."
SOURCE
No comments:
Post a Comment