Scratch off another profit quarter for Tiger Airways: DBS
Capacity utilization will not increase enough to rescue the regional carrier's sinking bottom line.
While its overseas operations like Tiger Australia are gearing up for more flights with recent regulatory approvals to do so, the increasing fixed costs of its core Singapore operations and an expected weak season will keep the company in the red.
Here's more from DBS:
With fleet continuing to be under-utilised in 4Q-FY12 (Mar YE), we estimate another quarter of losses for Tiger. This is also a seasonally weaker period for Tiger Singapore operations, and yields could be under pressure. Jet fuel prices show no signs of abating either. Thus, while there are some positive signs like opening up of new sectors in Australia and the chance to deploy additional aircraft to its new Indonesian associate, near term results may not inspire confidence.
The recent announcement that Tiger was initiating the search for a new CEO was a disappointment, as Mr. Chin and the new management have shown promise in trying to turn things around in Tiger, especially over in Australia, where relationship with the regulator seems to have warmed considerably. Mr. Chin could still be around for another 6 months and we hope for a smooth transition. Executing a turnaround during FY13 will be difficult for Tiger but not impossible, and we will continue to look for positive signs.