Tigerair bounces back to $23.8m profit in 2QFY14

But operating loss widening.

Despite the recorded profit this quarter, Tigerair is struggling against higher airport and handling charges and losses in regional associate airlines.

In a release, Tiger Airways Holdings Limited (Tigerair) has reported a profit after tax of $23.8 million for the quarter ended 30 September 2013 (2QFY14), compared to a loss after tax of $18.3 million recorded in the previous corresponding quarter (2QFY13).

In spite of higher revenue from Tigerair Singapore, total revenue in 2QFY14 declined 16.7% to $163.8 million year-on-year, following the partial disposal of Tigerair Australia during the quarter. Tigerair Australia’s revenue and expenses were not included as the airline ceased to be a subsidiary of the Group with effect from 8 July 2013. This led to lower total expenses of $176.6 million (-15.1%), which were partly offset by Tigerair Singapore’s higher cost.

Operating loss widened to $12.8 million compared to an operating loss of $11.5 million a year ago.

Mr Koay Peng Yen, Group CEO, said, “The Group posted a net profit for the second quarter, after taking into account the gain on partial disposal of Tigerair Australia. Our bottom line was nevertheless impacted by higher airport and handling charges following our relocation from Changi Airport’s Budget Terminal to Terminal 2, and losses in the associate airlines in Australia, Indonesia and the Philippines.”

For the six months ended 30 September 2013, operating loss contracted to $19.0 million, from $23.3 million recorded in the same period a year ago. Group loss after tax was $8.9 million, an improvement from the previous year’s loss after tax of $32.0 million. Tigerair Singapore recorded a 13.8% increase in revenue to $151.3 million, driven by growth in traffic volume (+21.9%) but partially offset by weaker yield (-5.6%).

The deterioration in net yield was largely affected by higher passenger service charge at Changi Airport Terminal 2. Unit cost went up by 3.6% as the increase in expenses (+32.1%) outpaced capacity growth (+27.5%). Consequently, Tigerair Singapore recorded an operating loss of $18.1 million compared to an operating profit of $4.8 million a year ago.

Share of loss from Tigerair Mandala amounted to $7.7 million for the quarter. The airline took delivery of one Airbus A320 in July 2013 and currently operates a fleet of nine aircraft. Tigerair Mandala’s network covers 17 international and domestic routes. In October 2013, it launched a new route between Yogyakarta and Palembang, and is the only airline serving this route.

Share of loss from Tigerair Philippines amounted to $9.0 million for the quarter. The airline operates a fleet of five aircraft and flies to 12 international and domestic routes. Tigerair Philippines commenced a new route between Manila and Phuket in September 2013.

Share of loss from Tigerair Australia amounted to $7.3 million for the quarter. Tigerair Australia’s fleet of 11 aircraft covers 16 domestic routes.

For its outlook, the company said Tigerair Singapore will take delivery of three more Airbus A320s, ending the financial year with 26 aircraft. As it will take time for the additional capacity to be absorbed into the market, passenger load factor and yield are expected to face some near-term pressure.

Tigerair Mandala continues to grow its presence in Indonesia through international and domestic network expansion, and broaden its distribution channels through the appointment of more travel agents.

Tigerair Philippines continues to expand its route network and number of international flights, particularly from the Philippines to Hong Kong and Thailand. It has applied for air rights between the Philippines and Japan, following a bilateral agreement to increase flights between the two countries.