SIA struggles to rescue TigerAir after core losses surged 107.7% in Q2

Its book value has plunged by 91.9%.

Singapore Airlines appears to have no choice but rescue its loss-making subsidiary TigerAir from its massively skewed balance sheet. TigerAir Holdings recorded a 107.7% YoY increase in 2QFY15 core loss to S$26.6m, mainly due to weaker yields in spite of higher traffic volume.

According to OCBC, Tigerair’s 2QFY15 results were further worsened by large provisions amounting to S$159.1m. These provisions charged during the quarter weakened Tigerair’s balance sheet tremendously and reduced its book value by 91.9% from S$278.7m as at 31 March to S$22.6m as at 30 September.

“It announced last week the proposal to undertake an 85-for-100 rights issue to raise gross proceeds of up to ~S$234m at S$0.20 per rights share. SIA has undertaken to subscribe for its pro rata entitlement as well as excess rights shares up to total of S$140m. In addition, SIA announced that it will convert all of its perpetual convertible capital securities (PCCS) holdings into shares prior to the rights issue, raising its stake in Tigerair from 40% to ~55%. Simply put, if the rights issue is approved, the minimum gross proceeds that Tigerair should receive is at least S$140m,” stated OCBC.