Tiger Airway’s Aussie grounding could cost it from S$35m-$60m

UOB says Tiger Airways’ losses will accelerate even if the suspension is lifted.

The appointment of former Silk Air CEO Chin Yau Seng as Executive Director could help boost confidence in the airline.

Here’s more from UOB:

Ban will likely be extended but loss of AOC unlikely. We believe the ban on Tiger Airway Australia will be extended on 9 July as the Civil Aviation Safety Authority of Australia is mandated to apply for a court order, which could result in a prohibition order for up to 40 days. While the market could react negatively to this, we believe this will not result in the cancellation of the Aircraft Operator Certificate.

Appointment of former Silk Air CEO as Executive Director could boost confidence. The appointment of Chin Yau Seng, former Silk Air CEO, underscores the commitment of Singapore Airlines and the Singapore authorities to address the key concern over pilot proficiencies.

Losses should accelerate even if TAA’s suspension is lifted. Given the negative publicity, it will be a while before confidence is restored in the airline. Meanwhile, TAA would very likely have to operate even at below breakeven loads to underscore its commitment in Australia. Our ballpark figures indicate that with a 70% load, TAA could stand to lose S$35m-$60m in FY12.

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