Mayday, mayday: Tiger Airways reports net loss of $104.3m

Tiger Airways Singapore's operating loss is at $16m, driven by excess aircraft capacity in the fleet and higher fuel prices.

In a news release, Tiger Airways Holdings Limited announced its results for the financial year ended 31 March 2012.

The net loss after tax for FY11-12 was $104.3 million, compared to a profit after tax of $39.9 million for the financial year ended 31 March 2011.

Total revenue for FY11-12 was $618.2 million, marginally lower than the $622.3 million recorded in FY10-11. Due to the under-utilisation of the Group fleet and the substantially higher fuel price, Cost per Available Seat Kilometre increased by 12% in FY11-12 compared to the previous year, whilst CASK increased by 9.6%.

The loss after tax for the quarter ended 31 March 2012 was $16.4 million, versus a profit after tax of $1.4 million in the quarter ended 31 March 2011. The under-utilisation of the fleet in Australia, coupled with stubbornly high fuel prices were the main contributors to the quarter’s loss.

Chin Yau Seng, Group CEO, said: “It is without a doubt that the Group’s financial results for the year ended 31 March 2012 were disappointing. However, we have taken steps, and are making good progress, in nursing the Group’s financial performance back to health.

“Clearly, the Tiger Airways Australia suspension by the Civil Aviation Safety Authority of Australia from 2 July to 11 August 2011 contributed significantly to the poor financial result. Following the suspension, Tiger Airways Australia conducted a thorough internal review of its processes and procedures, and has made major improvements. These have included changes in its governance practices, organisational structure, management systems and approach in dealing with external stakeholders.

“The Tiger Airways Australia suspension led to the under-utilisation of the Group’s fleet, which resulted in significant and adverse variances in the Group’s financial unit metrics in FY11-12. In an attempt to absorb the surplus capacity, Tiger Airways Singapore grew its seat capacity by 47% year- on-year. Encouragingly, Tiger Airways Singapore’s passenger numbers increased by 39%, albeit still lower than the growth in seat capacity.

“The new financial year presents us with an opportunity to close the books on FY11-12 and focus on our growth strategies to pull the Group back into profitability. We note that there are both opportunities and challenges in the new financial year. Fuel prices continue to hover at uncomfortably high levels and our challenge is to improve yields and boost ancillary revenue to compensate for the fuel cost impact.

“More positively, we concluded our 33% equity investment in PT Mandala Airlines in January 2012 and Mandala subsequently returned to the skies in Indonesia in April 2012. Mandala is currently flying on three domestic and international routes with its three aircraft, and we will continue to support Mandala in increasing its presence in Indonesia.

“Further, and in line with our joint-venture strategy across the South-east Asian region, we recently signed a revised term sheet to purchase a 40% equity stake in Philippines-based South-east Asian Airlines. We are aiming to conclude this deal by the second quarter of FY12-13, providing yet another avenue for the Tiger Airways Group to grow its paw print in the region,” said Mr. Chin.

Tiger Airways Singapore

Tiger Airways Singapore reported an operating loss of $16 million in FY11-12 compared to an operating profit of $53.8 million in FY10-11. The result was impacted by excess aircraft capacity in the Tiger Airways Singapore fleet and higher fuel prices. During the year, new services were launched to Cebu, Bangalore and Dhaka, and frequencies were increased on existing routes, including to Bangkok, Tiruchirapalli, and Hanoi. For the new financial year, services to Kochi began in April 2012 and services to Colombo will commence at the end of May 2012.

Outlook Statement from the Company

Following rapid capacity expansion in FY11-12, Tiger Airways Singapore is moderating its seat capacity growth to 7% in the Northern Summer 2012 season compared to the same season last year. This will allow passenger demand to catch up to the additional capacity introduced in the previous financial year, which should in turn lead to improvements in load factors in FY12-13.

Tiger Airways Australia is planning to commence operations from Sydney, its second domestic base, from July 2012. Following approval from the Civil Aviation Safety Authority of Australia to increase the number of sectors that it can operate, Tiger Airways Australia is ramping up to 64 daily sectors by the second half of calendar year 2012. From now until the end of June 2012, Tiger Airways Australia will continue to operate at reduced capacity and on a limited schedule.

Following the financial restructuring of Mandala with Tiger Airways and the Saratoga group as new investors, Mandala launched services in April 2012 on three routes. In this initial phase, Mandala will focus on building brand presence and load factors.

The Group continues to face a challenging business environment and remains exposed to high and volatile fuel prices.