Tigerair hammered by $24m associates losses

Investors' patience may be wearing thin.

According to DBS, 2Q-FY14 results disappoint (core net loss of S$35m) as Tigerair Singapore slips into the red. Associates contributed a further S$24m of losses to the bottomline, with all three operations in Indonesia, Philippines and Australia still in the red, with no visible signs of improvements. 

Here's more from DBS:

The Group also recorded S$48m impairment charges on its investments in associates in 2Q14. Despite this, management reiterated their faith in the longer term potential of these ventures by pumping in a further S$71m in shareholder loans.

Contrary to our expectations of continued positive operating results at the Singapore operations, Tigerair  Singapore slipped into the red in 2Q-FY14, recording operating losses of S$12.8m.

This came on the back of a 3.6ppts decline in load factor to 78.5% (as the capacity increase did not keep pace with demand) and a 5.6% y-o-y dip in passenger yield owing to adjustments for the higher passenger service charges at Changi Airport.

Costs per ASK, on the other hand, increased by 3.6% y-o-y, as a result of higher ground handling charges at Changi Airport and higher heavy maintenance expenses during the quarter.

Factoring in lower load factors and higher costs at Tigerair Singapore and wider losses from associates, we push up our core loss estimate for FY14 to S$80m from S$11m previously, and we now believe the Group is unlikely to turnaround in FY15 as well.

With Singapore operations showing signs of saturation, Australian losses continuing and the two cubs in Indonesia and Philippines still in the early start up phase without significant market share, investor patience may be wearing thin on the prospects for the counter.