Tiger Australian Operations post $22M Loss

[Marty H]

Surprised this hasnt been posted before now.

THE parent of the Australian low-cost airline Tiger Airways lost about $S28 million ($22 million) for the year to March, a sharp reversal on the previous 12 months, when it posted a $S10 million profit.

The result for the Singapore Airlines-backed Tiger Aviation indicates its Australian operations are still suffering large losses as it tries to establish a position in the domestic aviation market.

Tiger Aviation is the parent of Singapore's Tiger Airways and Tiger Airways Australia.

The privately owned airline is yet to lodge its annual accounts with Singaporean regulators but it has emerged that Singapore Airlines' share of Tiger's cumulative losses increased by $S14 million, or 44 per cent, to $S45 million for the year to March 31. Given it owns 49 per cent of the low-cost airline, Tiger lost an estimated $S28.4 million for the period.

Yesterday Singapore Airlines dismissed speculation that it had injected more capital into Tiger Aviation. But the biggest shareholder said it had stopped accounting for its share of further red ink at Tiger after accumulated losses exceeded its cash contribution of $S39.2 million.

Tiger Airways Australia did not respond to questions yesterday about its performance, saying only that it would be ''announcing our results shortly''.

The parent's Singapore-based chief executive, Tony Davis, has been upbeat about the airline's performance in Australia, but recently conceded it was still losing money. Tiger's only operation outside Singapore is in Australia.

In February Tiger, Australia's fourth-biggest airline brand, belatedly released its accounts for the year to March 31, 2008, which showed it ran up losses of $20 million. The figure included $7.9 million in start-up costs in Australia.

Tiger has recently shifted in its focus towards high-traffic routes, after a strategy of stimulating regional routes when it launched in Australia two years ago.

In July it signalled its intention to challenge Qantas, Jetstar and Virgin Blue when it began services on the country's busiest route, between Sydney and Melbourne. Since then it has announced services between Sydney and the Gold Coast - the fifth busiest route in Australia - and Melbourne and Brisbane.

However, industry insiders have been sceptical of Tiger's ability to service 18 routes in Australia with just seven Airbus A320 aircraft. An eighth is not due until early next year.

Tiger Aviation's other main shareholders are the private equity firm Indigo Partners and the Ryan family of Ireland, responsible for setting up Europe's largest airline, Ryanair.

[Marty H]

The Singapore operations arent making any money either.

BUDGET carrier Tiger Airways plunged to a $50.1 million loss last year as the Singapore-listed airlines group struggled to take a share of the Australian domestic market. The costs of operating in Australian skies also stripped $S20 million ($15.8 million) from the parent company's reserves, leaving the business with just $S13.2 million in available cash.
The group loss for Tiger Singapore and its cub Tiger Airlines Australia for 2008-09 amounted to $S50.8 million, reversing the previous year's $S9 million profit.
The annual accounts of Tiger Aviation Singapore, filed nine months late, show the company owed more than it owned, with liabilities at the end of March this year exceeding assets by $S109 million.
Group assets, held by both the Singapore and Australian businesses, were valued at $S187 million contrasted by liabilities of $S296 million.
Tiger Airways Singapore declared an operating profit of $S12.2 million, its second consecutive profit and a $3 million improvement on the previous year.
Group president Tony Davis said the Australian business was "negatively impacted by the adverse impact of record oil prices and foreign exchange volatility".
During the period, Tiger launched in Melbourne with three aircraft, opened a second base in Adelaide and incurred a $17 million loss on fuel hedging as jet kerosene prices soared to more than $US170 a barrel.
Revenue rose to $S384 million, an increase of $S74 million at a time when the business incurred a $S15 million rise in staff costs and a foreign exchange loss of $4 million.
Peter Harbison, a leading aviation commentator and head of the Centre for Asia Pacific Aviation in Sydney, said the carrier seemed committed to a long-term view.
Tiger Australia will switch from a holiday route operator to high yield routes. Having launched a Melbourne-Sydney service last July it will soon begin Melbourne-Brisbane flights.
It has also announced a Sydney-Gold Coast service.

[Ash W]

Why do these two posts contradic each other and why does the thread title say the Australian Ops lost $22m when it was the parent company?

Read the first line of the first article and it says the PARENT company of Tiger Australia lost $S22", I repeat the PARENT company not the Aus operations of said company.

Then the 2nd article says the loss was $50m (not sure SIN or AUD), but goes on to say the Aus operations lost $15.8m AUD.

[Marty H]

Unsure Ash but it paints a pretty clear picture that Tiger Airways is running out of cash at a very fast rate.

[Lukas M]

The total loss from Tiger Australia from March 2008-March 2009 was $S50.1million. Tiger Singapore posted a $S12.2 profit which just funded the loss from the Australian subsidiary, as well as funds from Cash reserves which they stripped S15.8Million from.

By the way, the first article was written by analysts predicting the outcome before it was announced (today).

Read this: http://www.centreforaviation.com/new...eak-down/page1

[Joe Frampton]

Hate to be cold and hard, but as a Brisbane based travel agent (and my wife having flown on them), the market image I perceive of Tiger right now is of absolute **** (oh, that's probably the airline AND the golfer )
My customers quite consistenly avoid them like the plague - and we do get loads of domestic customers as we charge no service fees. Even Air Asia gets a far, far better customer rap than Tiger right now.
If they want to shape up in Australia, they will have to start trying to "humanise" their approach to customer service, especially to u/s flights and other problem solving & handling. And weighing & charging extra for peoples' hand luggage?... I took 30 flights with Ryanair from 2006-2008, and that never happened once.
So I wish them all the best. In saying that, Qantas copped a SEVERE bashing in an online SMH blog forum over the last few days - over customer service and many other issues. Looks like the love affair with airlines is well and truly over time for people to set some realistic expectations me thinks

[Marty H]

So with $13.5M in cash reserves whats does that give the whole operation to last four months maybe???

[Marty H]

TIGER IPO has had a very luke warm response and may only raise $200M-$250M

Tiger's Expectations look likely to take a dive

In the same way that Tiger Woods is in danger of losing his significant other, it would seem the airline that shares his name is also receiving the cold shoulder.

Singapore-based Tiger-Airways is pre-marketing an initial public offering to insitututional investors and Street Talk understands the size of the floast has already been significantly scaled back due to a lukewarm response.

The IPO prospectus is expected to be lodged in Singapore on Monday and reports that it will be in the region of upto $S500 million ($394 million) are seen as wide off the mark, with $200 million to $250 million considered more accurate.

Moreover, the float will not even be passed under the noses of Australian investors given the scaled-back approach.

About 95 per cent has been tagged for Singapore institutions and the remainder for the country's retail shareholders.

But offshore investors are unlikely to be concerned.

In fact, they may breathe a collective sigh of relief given talk around the town is that Tiger Airways has been priced on a multiple of 10 to 15 times forward earning for fiscal 2011 - fairly toppy when you consider its major comparable airlines, Virgin Blue and AirAsia trade on roughly six times.

Tiger Airways' chief executive Tony Davis, has enough to deal with already.

Significant risks for airlines at the moment include fuel costs, interest rates (think aircraft leases on this could) and foreign exchange (a large proportion of Tiger's operating cost base is denominated in US dollars whereas US dollar revenues do not constitute a major proportion of total revenue).

Also worth noting is that part of the raising proceeds will go towards returning capital to Tigers's major shareholders including Singapore Airlines, Ryanair, and Temasek, whose stakes will be reduced.

The move by these investors to duck participation in such as small IPO suggests they don't see it future as burning bright.

Tiger Airways need the funds.
The airline recorded a pretax loss of $S47.7 million for the year ended march 31 and most of that was from the start-up costs of Tiger's aggressive Australian expansion, according to its latest accounts.

An unsuccessful float would be music to Qantas's ears.

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