Tiger-Virgin joint venture in Australia gets go-ahead

Australian regulators greenlight 60% stake sale.

According to the joint release, Tiger Airways Holdings Limited (Tiger) has received the go-ahead from the Australian ACCC for the sale of 60% of Tiger Airways Australia Pty Ltd (Tiger Australia) stake to Virgin Australia.

Koay Peng Yen, Group CEO of Tiger Airways, said, “We are delighted to receive the green light from the ACCC on this transaction. With this approval in place, we can now look forward to commencing discussions with Virgin on our plans to grow Tiger Australia, and enable it to compete more effectively in the Australia’s budget carrier space.”

The joint venture will result in a stronger Tiger Australia, allowing it to leverage the strengths of both its shareholders in network planning, operational management, and procurement, with a low cost and internet-based distribution platform. With two strong shareholders, Tiger Australia will be better-positioned to tap opportunities for further expansion in terms of fleet and market reach.

Tiger Airways and Virgin Australia have committed to invest up to a further A$62.5 million collectively into the business to fund growth in Tiger Australia. They have also committed to increasing Tiger Australia’s fleet size to 23 by 31 March 2018, with the potential to further increase to 35 aircraft.

Tiger Australia will be managed as a standalone entity, with a separate Board and Management team.

Based on the Group’s financial position as at 30 September 2012, Tiger Airways will record a pro forma one-time gain on disposal of about S$120 million. In this regard, pro forma total equity as at 30 September 2012 will increase by about S$128 million to S$344 million, and pro forma NTA will increase by 60% to 41.8 Singapore cents per share. The transaction will also lift the Group’s cash position by a further A$35 million.