Profit turnaround still a long way away for floundering Tigerair

SIA’s profitability will continue to suffer.

Tigerair is a long way away from salvaging its loss-making operations. According to OCBC, investors shouldn’t pin their hopes too much on Tigerair’s alliance with Scoot.

OCBC notes that it will take Tigerair 12-18 months to recover, and its parent airline SIA will continue to suffer profitability dents in the meantime.

“With a veteran from SIA taking over the helm of Tigerair just this year, the likelihood of real progress on the alliance is much higher. In addition, SIA’s recent undertaking to increase its stake in Tigerair from 40% up to ~56% clearly shows its commitment to grow Tigerair. We see this as a positive for Tigerair with SIA as its backer. However, we still think it will take at least 12-18 months to recover plus the fact that the yield environment remains depressed. Until Tigerair manages to turnaround, SIA’s profitability will continue to suffer as it will have a larger share of the expected losses of Tigerair in 2015,” noted OCBC.

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