Tiger Airways continues recovery with higher Q3 net profit

Budget carrier Tiger Airways on Friday (Jan 22) posted a net profit of S$6.8 million for the three months to Dec 31, 2015, in a sign that business is turning around.

The net profit for the fiscal third quarter was a marked improvement over the S$2.2 million earned a year ago. It also marked a reversal of the S$12.8 million net loss reported for the second quarter ended Sep 30.

Tigerair's revenue for the quarter rose 1.5 per cent to S$187.4 million, while its fuel costs fell by a third to S$43.5 million.

Commenting on its prospects, Tigerair said economic conditions remain uncertain. Surplus capacity in the industry will continue to exert downward pressure on yields in the near term, it added.

The budget carrier also said, however, that low fuel prices offered some respite. Tigerair is current the subject of a takeover bid by majority shareholder Singapore Airlines, which wants to take the budget carrier private.

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Tigerair lands back in black for latest quarter

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."

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SIA acquisition of Tiger Airways cleared for takeoff by competition watchdog

The Competition Commission of Singapore (CCS) on Friday (Nov 28) cleared the proposed acquisition of Tiger Airways Holdings by Singapore Airlines (SIA). CCS concluded that the transaction would not infringe the Competition Act as the ailing budget carrier is likely to exit its operations without the acquisition.

SIA is already the biggest shareholder in the Singapore-based budget carrier and will raise its stake in Tigerair from 40 per cent to 56 per cent. This means Tigerair will become a subsidiary of SIA.

Earlier this month, SIA had said there are no plans for a full takeover of Tigerair, but it did not rule out the possibility of such a move in the future. SIA already has another low-cost airline subsidiary, Scoot.

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No takeover plans for Tigerair, but SIA eyes more integration

Singapore Airlines (SIA) is not considering a full takeover bid for Tiger Airways (Tigerair), but it will focus on helping its loss-making associate recover through stronger network cooperation, following SIA’s recent move to increase its stake in the low-cost carrier, says SIA chief executive Goh Choon Phong.

Speaking at SIA’s latest results briefing yesterday, Mr Goh added that Tigerair remains an integral part of the group’s growth plans and has been making progress in consolidating its business.

Tigerair reported a net loss of S$182.4 million for its fiscal second quarter on Oct 17. With its other units such as SilkAir and SIA Engineering also suffering weaker growth, SIA’s net profit for the quarter ended September declined 43.5 per cent on-year to S$91 million.

Mr Goh said: “We intend to increase our stakes (in Tigerair) to a controlling interest, because we believe that SIA, with its scale and connectivity distribution, can benefit Tigerair beyond its alliance with Scoot.”

“A takeover offer for Tigerair is, however, not under consideration. Our focus now is to see in what manner we can help Tigerair back to financial health.”

SIA’s application to increase its stake in Tigerair to around 55 per cent from 40 per cent was submitted to the Competition Commission of Singapore (CCS) for approval last month.

In August, CCS gave the green light for Tigerair and SIA’s low-cost long-haul subsidiary Scoot to form an alliance.

Despite its persistent financial losses, Tigerair remains integral to SIA’s plan to expand its network portfolio via further integration of routes and flights between SIA, its regional wing SilkAir, Scoot and Tigerair.

“These are the four components that will allow us to extend market reach and tap traffic in all segments ... In the case of Tigerair and Scoot, the connecting traffic is less than 5 per cent now — there’s a huge potential we can tap here,” Mr Goh said.

Adding that Tigerair is not a lost cause, he said it is repositioning itself for the future, such as shedding unprofitable overseas joint ventures and taking steps to curb overcapacity.

Mr Brendan Sobie, chief analyst at the Centre for Asia Pacific Aviation, said the worst is likely over for Tigerair and that SIA’s plans for Tigerair will lead to mutual benefits.

“With a controlling stake, SIA can now ensure Tigerair is more aligned with its portfolio strategies,” he said.

But he added that a turnaround is not guaranteed for Tigerair.

“The LCC (low-cost carrier) market remains very competitive and, given its disastrous results in the past two years, any improvement will have to be drastic to be meaningful,” he said.

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Why SIA is keen to heal wounded Tiger

Singapore Airlines (SIA) has pledged $140 million to rescue Tigerair, yet again.

The additional funding will increase SIA's stake in the loss-making budget carrier from 40 per cent now to as high as 71 per cent.

The commitment follows a cash call by Tigerair two weeks ago, after it announced a $182.4 million loss in the three months to the end of September.

For the 12 months to the end of March, Tigerair recorded its biggest annual loss of $223 million.

To replenish its kitty, the airline is offering shareholders more stock at a discounted price.

In a show of support, SIA has said it will take up its entitlement and subscribe for any shares not taken up. Before that, it will also convert Tigerair convertible securities it currently holds into new shares.

This is not the first time SIA has come to Tigerair's rescue. Since 2011, it has doled out at least $100 million in two earlier fund-raising exercises, and seemingly gained nothing.

"It's putting good money into a bad business," said UOB Kay Hian's K. Ajith.

Tigerair has scaled back its operations significantly in the last few months by closing down subsidiaries in Indonesia and the Philippines. Its 40 per cent stake in Tigerair Australia will be sold to Virgin Australia for A$1 (S$1.13).

Bruised and battered, Tigerair is not expected to return to the black until after 2016 at the earliest.

So why is SIA wasting its time and money? Why not just let the Tiger tail fall from the sky?

Because despite current challenges, experts believe that the demand for short-haul low-cost flights in Asia will continue to grow strongly in the coming years.

Without Tigerair, SIA has no presence in this market, leaving it defenceless against rivals like AirAsia, Jetstar and Lion Air.

With the likes of Emirates and Cathay Pacific putting intense pressure on its premium long-haul business, SIA also believes it must diversify and enter new market segments to continue to fly high.

In short, SIA has no choice but to keep Tigerair alive, even if it means effectively taking control of the carrier.

This was never the plan.

In December 2003 when SIA's then chief executive officer Chew Choon Seng announced plans to launch Tiger Airways, he made it clear that SIA would not be in the captain's seat.

Many previous attempts by full-service carriers to run budget airlines had failed, he said. "The low-cost model requires completely different methods and procedures, marketing approaches and skills, and it is hard to be both premium full service and low cost, no frills at the same time. Hence our decision to have it as a 49 per cent-owned associate company rather than a majority-owned subsidiary."

For as long as Tigerair managed its affairs well, SIA did not intervene.

But the shocking grounding of Tiger Airways Australia in July 2011 by the Australian civil aviation authority over safety concerns led to a management overhaul and the entry of an SIA divisional vice-president, Mr Chin Yau Seng, as Tiger's new head.

Industry veteran J. Y. Pillay, widely credited with turning SIA into a global leader, joined as non-executive chairman the same month, although he was approached by Tiger's board even before the kerfuffle in Australia.

Mr Chin stayed for a year before passing the helm to shipping veteran Koay Peng Yen, who served for about two years.

After he left in May, yet another SIA senior executive, Mr Lee Lik Hsin, took over as group chief executive officer.

Like many other low-cost carriers, Tigerair has been hit by regional overcapacity - airlines adding more seats than demand can soak up - which has pushed fares and takings down.

But unlike Malaysia's AirAsia and Indonesia's Lion Air which operate out of huge domestic markets that have cushioned some of the impact of overcapacity on international routes, Tigerair and, by the same token, Singapore's Jetstar Asia, do not have a similar advantage.

Tigerair also made mistakes along the way, with its management "clearly bordering on being clueless", said Associate Professor Terence Fan of the Singapore Management University.

With higher costs than rivals like AirAsia, for example, Tigerair should have stayed away from well-established low-cost territories and opted instead for newly emerging markets like Taiwan and Japan, where competition is less intense and yields higher, he said.

Lessons learnt, the current plan is to downsize, focus on the Singapore operations and turn losses into profits, with SIA's money and expertise.

The past few years were painful but the business restructuring in the last few months, and SIA preparing to take on a bigger stake and role in the running of the airline, could be just what Tigerair needs.

For one thing, it would pave the way for the short-haul budget carrier to work more closely with SIA's wholly-owned long-haul budget arm, Scoot, which they have not been able to do effectively thus far.

This was in fact the plan when SIA launched Scoot in June 2012, as part of its portfolio strategy of having a presence in all the key business segments.

SIA's chief executive officer, Mr Goh Choon Phong, speaking at the group's annual results briefing in May, said: "Tiger and Scoot make natural partners in connectivity. One with narrowbody aircraft servicing largely the region. And the other with the ability to go medium, and potentially in the future perhaps long haul, and operating widebodies, and for them to connect with each other."

Scoot working with Tigerair allows SIA to be present "in virtually all the different segments of the travel industry", Mr Goh said.

"And what needs to be done, as we have done for SIA and SilkAir, is closer integration," he added.

A plan is being worked out and details will be unveiled soon, insiders say.

As long as Tigerair has a place in SIA's overall business strategy, it will have the backing of the premium carrier, said Mr Shukor Yusof of aviation consultancy Endau Analytics.

Never mind that the carrier's "raison d'etre is in doubt, given its weak foundation, limited growth potential and inability to compete effectively", he added.

With Asean moving towards open skies, it is also in SIA's interest to keep Tigerair alive, analysts say.

The goal, by the end of next year, is for the 10 member nations to remove all restrictions on flights from their countries.

When this happens, and as airports in the region continue to invest in infrastructure to boost their handling capacity, carriers like Tigerair will be able to fly as and where they choose within the region.

Today, air services are bound by government-to-government deals and countries are sometimes reluctant to open their skies fully to airlines from neighbouring states for fear that their own carriers will not be able to compete with foreign airlines.

The Tiger is badly wounded but with a clear recovery plan and enough money and expertise to execute it, there is no reason why it cannot roar back in time to cash in on the region's aviation liberalisation and other future opportunities.

SIA will leave no stone unturned to see that this happens.

Mr Shukor said: "SIA has deep pockets and, loss of money aside, it's loss of face and loss of influence in a critical part of the business that they are probably most concerned with."

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SIA's mooted Tigerair takeover: Competition watchdog calls for public feedback

The Competition Commission of Singapore (CCS) is seeking feedback on the proposed acquisition of additional shares in Tiger Airways (Tigerair) by Singapore Airlines (SIA).

CCS on Friday (Oct 24) said it received notification from the two carriers on the proposed deal a week ago. On Oct 17, Tigerair had reported an after-tax loss of S$182.4 million for the fiscal second quarter and said it will raise up to S$234 million via a rights issue.

SIA is already the biggest shareholder in the Singapore-based budget carrier and is seeking to raise its stake in Tigerair from 40 per cent to approximately 55 per cent. If the deal goes through, it would make Tigerair a subsidiary of SIA, on top of the Singapore flagship carrier's low-cost airline Scoot.

More information can be found at ccs.gov.sg. The closing date for the submission of feedback is Nov 7.

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Virgin takes full control of Tigerair Australia for US$0.88

Virgin on Friday (Oct 17) took full control of budget carrier Tigerair Australia, buying the remaining 40 percent it did not already own for A$1 (88 US cents) from its Singapore-listed parent.

Virgin Australia purchased a 60 percent stake in mid-2013 for A$35 million and said Tiger Holdings had agreed to sell the rest of the carrier, which has struggled to reach profitability, for the tiny sum, effectively ending their joint venture. Tiger will continue to licence its brand to Virgin.

Virgin Australia chief John Borghetti said the acquisition would allow it to fly to a number of new short-haul international destinations, providing growth opportunities for the business, while accelerating Tiger's drive for profitability.

"Given the ongoing subdued consumer demand in the Australian domestic market, the growth of the Tigerair Australia domestic fleet is likely to be reduced," he said. "Under this proposed transaction, we will benefit from the economies of scale and achieve profitability ahead of schedule by the end of 2016, by leveraging the resources of the wider Virgin Australia Group."

Tiger, the local subsidiary of Singapore Airlines' Tiger Airways, has a history of poor financial and operational performance.

The move, which is subject to Foreign Investment Review Board approval, comes after a difficult 12 months for Australian airlines as intense battle for market share saw both Virgin and Qantas suffer heavy losses. Virgin posted a full-year net loss of A$355 million, while Qantas suffered a record loss of A$2.8 billion.

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Tigerair reports S$182.4m Q2 loss, announces rights issue

Budget carrier Tigerair posted on Friday (Oct 17) an after-tax loss of S$182.4 million for the fiscal second quarter and said it will raise up to S$234 million via a rights issue.

Tigerair, whose biggest shareholder is Singapore Airlines (SIA), said the huge loss for the quarter ended Sep 30 was due primarily to one-off charges amounting to S$161.1 million, resulting from the subleasing of surplus aircraft and exit from Tigerair Australia.

To strengthen its balance sheet, Tigerair plans to raise up to S$234 million in a renounceable non-underwritten 85 for 100 rights issue. The rights shares will be priced at S$0.20 each, representing a 39 per cent discount to the one-day volume weighted average price of S$0.33 per share on Thursday (Oct 16).

SIA has committed to subscribing for its share of the rights, and will also subscribe for excess rights shares up to a total of S$140 million. Prior to the rights issue, SIA will also convert its perpetual convertible capital securities holdings in Tigerair into ordinary shares.

The conversion will raise SIA’s stake in Tigerair from 40 per cent to approximately 55 per cent before the rights Issue, effectively making Tigerair a subsidiary of SIA.

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Tigerair to right-size operations with sublease of aircraft to IndiGo

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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Singapore-bound Tigerair flight diverted to Batam

A Singapore-bound Tigerair flight from Hong Kong landed unexpectedly in Batam, according to a woman whose mother was on board the plane. The airline said that a windshear had forced it to make the diversion.

Ms Serena Ng said flight TR2067 was due to land in Singapore at 10.30pm on Saturday night (Sep 20), but a check on Changi Airport's website shows it only arrived at 2.41am.

Ms Ng managed to contact her mother on the phone, and learnt that the plane had landed in "an airfield in Batam." "My mum told me TR2067 attempted to land in Singapore twice, but failed, and she heard loud vibrating sounds from the engine and thunder," Ms Ng said.

Air traffic tracker Flight Radar 24 listed the A320 plane as having landed in Batam at 11.36pm.

Mr Sim Leong Chin, who had waited for his friend at Terminal 2 since 10.30pm, said he did not find it out of the ordinary for the delay. He added he was not worried although he had no information of the plane’s whereabouts until near midnight, when a staff at the airport said the plane was delayed due to bad weather.

But another lady – whose daughter was on board TR2067 - told Channel NewsAsia she was very worried. Speaking in Mandarin, she said: “The information on the arrival timings showed the plane was ‘confirmed’ at around 10.30pm.

“But shortly after that, the information under the ‘status’ column changed to ‘ask airline’. I became worried after that. What if the plane went missing?”

Despite the four-hour delay, passengers Channel NewsAsia spoke with appeared calm, and said they were relieved the plane had landed safely in Singapore.

Tigerair meanwhile, issued a statement saying that at no point during the diversion were the safety and security of passengers and crew compromised.

"Flight TR2067 was delayed due to inclement weather and the presence of windshear - a rapid change of wind speed and direction over short distances - while attempting to land in Singapore," said the airline in a statement. "After making two landing attempts, the flight was diverted to Batam to refuel and await better landing conditions as part of Tigerair's standard operating procedures."

The statement added: "The loud engine noise heard by passengers was due to the plane making a go-around which involved the powering up of the aircraft engine, which was operating optimally. At no point was the safety of our crew and passengers compromised, and the flight landed safely in Singapore at 2.41am today."

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'Sawing sounds' on Tigerair flight alarm passengers

 An unusual "sawing sound" that persisted for about 30 minutes on board Tigerair's TR2105 caused some passengers to demand that they be allowed to disembark.

The noise was caused by a sensor fault that did not compromise safety, Tigerair later told Channel NewsAsia. The budget carrier also apologised for the inconvenience.

Upon boarding the Sep 3 flight from Bangkok to Singapore, one passenger, who identified himself as Mr C M Chan, said he was extremely worried by the "loud and continuous sound" that filled the plane as it taxied from the airway bridge. "I have been flying for years, and had never heard such a sound before," the 44-year-old consultant told Channel NewsAsia.

He said he asked a flight attendant to check with the pilot about the cause of the noise before take-off, and was then informed that it was due to the plane's hydraulic systems, but that the plane was safe to fly. Still concerned, Mr Chan said he asked to disembark, but the plane took off all the same.

Fellow passenger Ms Fong Weihui reported feeling strong vibrations from under the seats. "The sound from the faulty hydraulic pump roared loudly and the aircraft trembled violently as it was taking off," she said. She added that she found it "very shocking" when a flight attendant told her the plane had been experiencing this problem for three days.  

The pilot later made an announcement explaining the noise, but Mr Chan said he was not able to hear the message clearly. "I was really worried I would never land again. I only breathed a sigh of relief when I landed two hours later," he said. He added that a subsequent call to the airline's customer service department also did not yield any satisfactory answers.

Another passenger, Mr Faris Aziz, said he found the sounds “uncomfortable” and “irritating” and likened it to being in a "hell room, full of dogs' barking sounds". “I was so afraid that I almost had the feeling to get out of the plane if I could,” he recounted, but said the journey was otherwise a smooth one. He said he had heard similar sounds lasting just a few seconds on previous flights, and later found out through research that it is "pretty common on A320 planes".

A spokesman for the Singapore-based budget carrier Tigerair told Channel NewsAsia that the loud sound came from the aircraft’s Power Transfer Unit (PTU), which connects the aircraft’s hydraulic systems.

"The PTU is meant to be in operation only while the aircraft is on the ground. However, a sensor fault in the unit had caused it to continue running even after take-off," said the spokesman.

"At no time was the safety of the passengers and crew on board compromised, even though the sound might have caused disturbance. Nevertheless, we note that some passengers might have been troubled by the sound as the captain’s explanation over the PA system might have been partially masked by the noise. We apologise for any inconvenience caused, and would like to reiterate that safety is of utmost priority to Tigerair."

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Taiwan's first budget airline set for maiden flight

Taiwan's first budget airline said on Monday (Sep 1) it was scheduled to launch its maiden flight later this month, tapping into the robust demand for cheap travel in Asia. Tigerair Taiwan - a joint venture by China Airlines, the island's leading air carrier by fleet size, and Singapore's low-cost carrier Tigerair - is slated to start its service on September 26 with a flight to Singapore from Taiwan.

The announcement came after a brand new A320, the company's first aircraft, flew from France to the northern Taoyuan airport early Sunday morning. "The arrival of the plane is a milestone in the company's operation," company spokesman Eric Lee told AFP.

"We'd open up to three other flight routes to the Southeast Asian region after October," he said, adding that the air carrier also plans to begin flights to South Korea and Japan from the first quarter of 2015. Tigerair Taiwan, 90 percent controlled by China Airlines with the remainder held by Tigerair, plans to introduce a fleet of 12 A-320s in three years.

Taiwan's TransAsia Airways has also announced the formation of a low-cost carrier called "V Air", expecting the subsidiary to become operational in the final quarter of this year.

Demand for discount flights has been rising in Asia. Twelve foreign budget airlines, including Malaysia-based AirAsia and Japan's Peach Aviation, offer services to and from Taiwan.

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Scoot and Tigerair proposed alliance cleared

The way looks clear for budget airlines Scoot and Tigerair Singapore to extend their partnership. According to both carriers, they have obtained the green light from the Competition Commission of Singapore (CCS) on Friday (Aug 8).

The two carriers have been granted anti-trust immunity, which will allow closer cooperation in scheduling, pricing, sales and marketing and other matters.

Scoot is a wholly owned unit of Singapore Airlines (SIA) while Tiger lists SIA as its largest shareholder. Tigerair focuses on shorter-haul journeys, while Scoot's emphasis is on medium to long haul routes. The two carriers first announced a partnership in October 2012.

Earlier this year, they sought clearance from the CCS for the alliance to enter a second phase. According to the CCS, both airlines operate largely complementary networks of flights.

The competition watchdog says although some parts of the proposed cooperation would raise competition concerns, these would be offset by resulting net economic benefits to Singapore passengers.

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SIA Q1 profit falls 71.3%, flags weak outlook

Singapore Airlines, Asia’s second-largest carrier by market value, reported a 71.3 per cent fall in its fiscal first-quarter net profit, as intense competition for passengers and cargo squeezed yields and its share of profits from associated companies dropped, mainly because of losses at Tiger Airways.

“Looking at the competition and what is coming in terms of capacity, we think that the next 1-2 years will continue to exert pressure on yields. We will have to manage our costs better, including fuel costs, in order to stay competitive,” SIA chairman Stephen Lee said on the sidelines of the company’s shareholders’ meeting today (July 30).

Five analysts have a “sell” rating on SIA, six rate it as a “buy” and 10 have a “hold” recommendation.

Battling intense competition from Gulf airlines and discount carriers, SIA Chief Executive Goh Choon Phong is pushing Singapore’s flag carrier into new markets including India, while increasing the group’s exposure to the low-cost segment through Tiger and its fully-owned subsidiary Scoot.

An overcapacity in the global air freight market is also hitting SIA, whose cargo unit still reported an operating loss.

Net income in the three months ended June was S$34.8 million, compared with S$121.8 million a year earlier, SIA said. Sales dropped 4.1 per cent to S$3.68 billion.

SIA, facing increased competition from budget airlines and Middle East carriers such as Emirates that are expanding into Asia, took a loss of S$18.9 million from associated companies, mainly from Tiger, in the quarter, compared with a loss of S$2.9 million a year earlier, according to the statement.

Tiger, which is 40 per cent owned by SIA, earlier this month reported a loss of S$65.2 million in the quarter ended in June, widening from a S$32.8 million loss a year earlier. The budget carrier plans to put more focus on growing its overseas business and ground eight planes to help revive the business after losing money for three straight quarters.

Travel demand to Thailand has eased since the May imposition of martial law while the two crashes involving Malaysian Airlines planes threaten to slow visitor arrivals to the Southeast Asian region.

“This sector has got far, far too much outside its own ability to control,” said Mr Credit Suisse analyst Timothy Ross. “There’s going to be weaknesses in Southeast Asia, where we’ve seen Thailand impact travel demand. The ongoing difficulties that Malaysian Airlines is having probably rubbed off a little bit for travel demand in the region.”

Operating profit dropped 52 per cent in the first quarter as growing competition hurt ticket prices. The airline’s passenger yield, or the money earned from carrying travellers one kilometre, fell to 10.9 Singapore cents from 11.1 cents a year earlier, while cargo yield rose to 33 cents from 32.7 cents.

Cost of fuel, the airline’s biggest expense, fell 4.7 per cent to S$1.37 billion.

The airline gained S$20.4 million from fuel hedging in the quarter, compared with a loss of S$42.8 million, it said.

Passengers carried by SIA rose 1.7 per cent to 4.65 million in the quarter and the carrier filled 77.7 per cent of available seats. It packed 278.5 million kilograms of cargo, 0.4 per cent more than a year ago, and filled 62.4 per cent of space.

“Aggressive fares and capacity injections from competitors will continue to place pressure on yields,” SIA cautioned. “The outlook for the air transportation industry has become more challenging with continuing uncertain global economic climate, geo-political concerns in the region and elevated fuel prices,” SIA added.

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Tiger Airways' losses widen in Q1

Tiger Airways reported on Wednesday (July 23) a net loss of S$65.2 million for its fiscal first quarter ended in June, doubling the net loss of S$32.8 million in the same period a year ago.

Tiger Airways says the bottomline was hurt by one-time costs related to the shutting down of its loss-making Indonesian venture, Tigerair Mandala. Its share of the loss at Mandala amounted to S$35.3 million. In addition, Tiger Airways booked provision of S$14.6 million in relation to the shutdown.

Meanwhile, total revenue declined by 28.4 per cent to S$169 million.

Tigerair Singapore alone saw an operating loss of S$19.8 million for the April-June period, compared with an operating profit of S$5.9 million in the same period a year ago. But this was an improvement from the previous quarter when it booked an operating loss of $29.4 million.

Revenue climbed by 3.2 per cent to S$166 million.

Looking ahead, the Group says Tigerair Singapore continues to operate in a challenging environment due to persistent oversupply of capacity in the region.

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Budget airlines set for further consolidation, say analysts

 The budget carrier Tigerair Singapore has been refocusing its operations with recent exits from Indonesia and the Philippines.

Amid the challenging environment for low cost airlines, analysts believe that its decision to focus on Singapore is the right move.

Paul Yong, vice president of equity research at DBS Vickers, said: "Their strategy should be to turn around the Singapore operations, which in the past has been quite profitable for them but has been loss-making because of all the capacity they've added.

"I think over the longer term, they will turn around operations in Singapore. Over the last two months, the operating statistics is that the growth in demand has finally caught up with capacity growth."

Industry observers said closer cooperation with Scoot -- the long-haul budget carrier under Singapore Airlines -- could be on the cards for Tigerair.

Brendan Sobie, chief analyst at the Centre for Asia Pacific Aviation, said: "The ties between Scoot and Tiger are very critical for the SIA group, particularly for Scoot to be a larger and long-term viable long-haul low-cost carrier. You need the feed.

"It is also important for Singapore and Changi airport as a whole because they are now going through this period where traffic has stopped growing and opening up low-cost carriers' connections -- in particular Scoot and Tiger -- is the main growth vehicle for the future."

Scoot is expected to take delivery of 20 new Boeing 787 aircraft starting in November 2014.

Analysts believe that it is in a position to scale up in the future, potentially expanding services into North Asia and even Europe.

Overall, the outlook remains challenging for the budget airline industry as a whole. Almost 20 low cost carriers are currently operating in Southeast Asia and industry-watchers said they expect further consolidation as weaker players drop out.

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Tigerair Mandala to cease operations from July 1

The Indonesian budget carrier Tigerair Mandala will cease operations from July 1, 2014 after its shareholders decided to stop funding the airline.

Tigerair Mandala has been struggling to make a profit. It booked six consecutive quarterly losses, with a loss of S$95 million for the first quarter of this year.

Tigerair Mandala is 35.8 per cent owned by Singapore's Tigerair. The other shareholders include Saratoga Group and PT Cardig International.

Tigerair and other shareholders have explored various options for the carrier in recent months but failed to get a buyer.

They concluded that the carrier would not be able to sustain its operations.

Group CEO of Tigerair, Lee Lik Hsin, said Indonesia remains an important market for the airline and it will continue to maintain an active presence there through Tigerair Singapore.

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Tigerair appoints new Group CEO

Tiger Airways Holdings has announced the resignation of its CEO, Mr Koay Peng Yen, effective May 12 and the appointment on the same day of Mr Lee Lik Hsin as CEO.

In a statement, the company's board noted Mr Koay's contribution to the growth and development of the group.

"He nurtured the management team, introduced a sense of purpose to the organisation, and managed its external investments in accordance with the rapidly changing circumstances of the industry," the statement said.

During his tenure, the Tigerair Group "endeavoured to improve the fortunes" of its overseas units -- Tigerair Australia, Tigerair Philippines and Tigerair Mandala, it added.

However, "turbulence in those markets hampered fledgling carriers from establishing a decisive hold".

Consequently, Tigerair sold 60 per cent of its Australian unit to Virgin Australia, withdrew entirely from Tigerair Philippines and curbed the network of Tigerair Mandala.

"Tigerair Singapore, which had been growing at the rate of 30 per cent in the past three years, hit turbulence when the market sagged in mid-2013 through the imbalance of capacity and demand," the statement said.

"Nonetheless by the time of Mr Koay's departure, Tigerair Singapore had started the process of consolidating its services in preparation for a decisive turnaround in its prospects.

"Throughout his 21 months in Tigerair Group, Mr Koay applied his extraordinary vigour, talent and passion to the tasks at hand.

"The Board thanks him for his stewardship of the Group at a very difficult time in its history, and wishes him well.

"Mr Koay will serve as an Advisor to the Board and remain as a Non-Executive Board Director until the Annual General Meeting on 31 July."

The incoming CEO, Mr Lee, has "served with distinction" on the Tigerair board as a representative of SIA, the major shareholder, the statement said.

"He has been tested in demanding assignments during his 20-year career in SIA.

"He brings with him a wealth of experience at the senior level in the airline industry."

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Loss-making Tigerair seeks turnaround by clipping own wings

Tigerair is grounding eight planes and cutting unprofitable flights in an unprecedented move to turn its loss-making business around.

Battered by bruising competition, which has pushed the carrier into its biggest loss ever, Tiger-air will park the planes - about 15 per cent of its total fleet - until the end of March next year.

The decision to downsize comes about two months after the airline cancelled an order for nine single-aisle planes that were due to arrive this year and next.

There are just too many flights serving the region and not enough demand to fill seats, said group chief executive officer Koay Peng Yen during a media tele-conference following the release of Tigerair's financial results yesterday.

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Third year of losses for Tigerair

Budget airline Tigerair is in the red for the third straight year and the losses are widening.

It posted a net loss of S$95.5 million for the fiscal fourth quarter ended on March 31.

This brings its losses for the full year to S$223 million, a sharp jump from the S$45.4 million losses a year ago.

Tigerair says the higher losses were largely due to exceptional charges and losses of associate and joint ventures.

Operating losses amounted to S$24.2 million for the quarter. It is the fourth straight quarter that the firm reported operating losses.

Given the uncertain market conditions, the airline says it is reviewing its investment in its Indonesian arm, Tigerair Mandala.

Share of loss from Tigerair Mandala amounted to S$16.1 million for the quarter.

Looking ahead, Tigerair expects yield and load factors to remain under pressure amid an oversupply of capacity in the region.

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