Low flyer: Discover why analysts are downbeat on Tigerair’s improved operating statistics

Its 12 grounded aircrafts remain a main drag.

Tiger Airways reported an improved passenger load factor for the first two months of it 2QFY15 operating statistics, but analysts remain downbeat on its capacity management and aircraft utilisation.

According to OCBC, its 12 grounded aircraft will continue to drag Tiger’s earnings until they are able to either sub-lease or novate leases of these grounded aircrafts to other parties.

“However, we remain concerned about its 12 grounded aircrafts as they continue to incur lease expenses. We also do not expect any fleet expansion until 2018, when Tigerair takes delivery for its order for A320neo aircrafts,” noted the report.

OCBC also highlighted Tigerair’s alliance with Scoot. Though positive, OCBC warns that it will contribute to the carrier’s results only after 1HFY16..

“With the approval of the anti-trust immunity (ATI) for Tigerair-Scoot alliance (TS), Tigerair will be able to capture interlining passengers flying from Scoot’s medium to long-haul destination, through Singapore, to other parts of Southeast Asia served by Tigerair. However, in order to capture this market, timing of connecting flights must be coordinated and changes to flight timings require approval from the relevant Singapore authority. Hence, we expect the alliance to have meaningful contribution to Tigerair’s results only from 1HFY16
onwards,” stated OCBC.