What’s next for Tigerair after finally breaking even in Q1?

Low fuel costs help, but overcapacity issues remain.

Tigerair finally managed to almost break even in the first quarter, with its losses down 89% to just $1.7m in the first three months of its financial year.

However, analysts warn that there’s still some way to go before the loss-making budget carrier swings back into full profitability.

“Overcapacity is likely to persist and plague Southeast Asia’s airline industry as the two biggest Low Cost Carriers (LCCs), AirAsia and Lion Air, are expected to further expand their capacity over the next few years. Overcapacity translates to downward pressures on yields,” said OCBC analyst Eugene Wong.

DBS analyst Paul Yong said that although the coming quarter is a seasonally weaker one for Tigerair, a “much stronger” second half is on the cards for the carrier.

“We expect a much stronger second half for the carrier, primarily as fuel costs will be much lower. Tigerair has hedged about 40% of its fuel requirements for the next 15 months at US$87/bbl vs the current price of around US$70/bbl and our assumption of US$ 90/bbl,” Yong noted.