Paper tiger?: Continued losses bring TigerAir to its knees

Revenue came in 7.7% below expectations.

TigerAir continues to fly low as profits this quarter suffered a 50% reduction worth $32.4 million due to TigerAir Mandala’s operating losses and shutdown costs. This is compounded by higher-than-expected operating costs resulting in an operating loss of $16.4 million.

A recent report by OCBC reveals that shareholders will be disappointed once again as equity was eroded by 22.5% quarter on quarter to $216.1 million, almost half of last year’s $469.7 million.

TigerAir Singapore, the carrier’s sole remaining TR operation, could not the beacon of hope as it continues to incur losses of its own despite revenue growth due to capacity growth and improved load factor. These two were more than offset by weaker yield and increase in unit costs.

Here’s more from OCBC:

Correspondingly, breakeven load factor is at an exceedingly high 96.7%, which essentially implies that Tigerair Singapore cannot breakeven (maximum PLF was 89% in the past three years).

Four aircraft are returned to TR from the now-defunct Tigerair Mandala. We understand from management that as planes’ deployment are still being assessed, provisions have not been made. Unless the new Tigerair Taiwan venture can absorb them, we think provisions will be made eventually because: 1) prior eight grounded aircraft suggests lack of redeployment, leasing or sales opportunities, and 2) 1QFY15 aircraft utilisation decreased by 9.0% YoY to 11.3/aircraft/day, thus it is unlikely more planes will be operated.