Tiger’s losses amount to a depressing $21m in 1Q12

Silenced, for now

Tiger operates short-to medium-haul to/from Singapore and to domestic destinations within Australia. We believe Tiger does not operate in the right markets. Singapore lacks a domestic market and most of Tiger’s routes are very competitive. Meanwhile, the Australian domestic market is dominated by other airlines, restricting Tiger’s market strength. Further, the flight ban that was imposed by the Civil Aviation Safety Authority on Tiger has put the airline back to square one in Australia. Finally, all of Tiger’s planned ventures, although in the right markets, have probably come too late.

Weak performance so far

Tiger made a net loss of SGD21m in 1Q12 (versus profit of SGD2m in 1Q11). This was partly the result of rising fuel prices and partly the impact of volcanic disruptions in Australia.

Challenging times ahead

So far in 2Q (July-August), Tiger’s load factor is down 7ppt y-o-y and traffic is down 27% y-o-y. This stems from the Australian flight ban, which we expect to weigh heavily on Tiger’s performance in 2Q and for the full year. We expect Tiger to remain loss making in FY12.