Tigerair tamps down on ballooning losses by subleasing 12 surplus planes

Its cash flow burden will be reduced by $163m.

Desperate times call for desperate measures, and Tigerair had resorted to subleasing its 12 idle aircraft to rein in ballooning losses. The carrier yesterday revealed that it is subleasing its surplus planes to InterGlobe Aviation Limited, a budget airline based in India.

Most of these aircraft were previously operated by Tigerair Philippines and Tigerair Mandala, and had been returned to the Group upon its divestment of Tigerair Philippines in March this year and Tigerair Mandala’s cessation of operations in July.

These 12 aircraft will be progressively delivered to IndiGo over a period of six months starting October this year, and each plane will be subleased for between three and four years. 

Each aircraft will be subleased for between three and four years. With the lease of one of the 12 aircraft expiring in 2018, only 11 of the aircraft will be returned to the Group at the end of their respective sublease periods. 

Following their return, seven of the 11 aircraft are expected to re-join the operating fleet, while the remaining four may be progressively re-introduced back to the service network within two years.

“Given the current overcapacity situation in the industry, the 12 aircraft will be subleased at a discount to their original lease rates. However, compared to the idling of these 12 aircraft, this sublease agreement will significantly reduce the Group’s cash flow burden by about $162 million over the sublease periods,” Tigerair noted in a statement to the SGX.