Tiger's regional ventures makes Singapore expansion unnecessary

Given its foray into PT Mandala and SEA Air and with Tiger Australia flying more sectors, Tiger Singapore will moderate its capacity expansion in FY13.

Instead, Tiger Singapore can focus on improving yields and load factors.

Here's more from OCBC Investment Research:

Recovery in core operations, Tiger Australia is on track to begin operations in Sydney as its second base in 2QFY13. Tiger Australia will then be able ramp up its operations to 64 sectors/day and optimise the utilisation of its 10 aircraft.

Meanwhile, Tiger Singapore will be moderating its capacity expansion in FY13. In FY12, Tiger Singapore expanded capacity rapidly, after the group’s deliveries of new aircraft were directed to Singapore as a result of TGR’s  lying restrictions in Australia. With Tiger Australia flying more sectors and lowering its unit fixed cost and Tiger Singapore more focused on improving yields and load factors, TGR’s profitability is poised to considerably improve in FY13.

Regional JVs in place to absorb new aircraft deliveries. TGR’s strategy of owning regional JVs is takingshape after its 40%-stake investment into South East Asian Airlines was finalised earlier this month, and encouraging early operating statistics from its 33%-owned PT Mandala Airlines. These JVs are earmarked to absorb most of TGR’s aircraft deliveries in FY13, allowing Tiger Singapore to stop its forced capacity expansion.