Tiger Airways profit rises to $1.9mln

$7.4 million improvement driven by strong passenger growth, unit revenue increases, and continued strict cost control.

Tiger Airways Holdings Limited (“the Company”) on Thursday announced its results for the quarter ended 30 June 2010, the first quarter of the FY2010/11 financial year. Profit before tax, excluding foreign exchange differences, for the quarter ended 30 June 2010 was $7.6 million, a $20.7 million improvement over the $13.1 million loss recorded for the same quarter in the prior year, according to a company report.

The reported profit before tax for the quarter ended 30 June 2010 was $1.3 million, a $7.4 million improvement over the $6.1 million loss recorded in the quarter ended 30 June 2009.

The quarterly result was supported by revenue growth of 45.0% from $100.1 million to $145.1 million, resulting from a 39.0% increase in passenger numbers. Growth in passenger volume outstripped seat capacity growth of 36.9%, leading to a 1.3 percentage point improvement in load factor to 84.2%.

Unit revenue as measured by Revenue per Available Seat Kilometre (RASK) increased 24.2% over the same quarter last year, signalling strong revenue momentum particularly from our Singapore business, shorter average stage length and the continuing maturity of the airlines in the Group.

Due to a 14.9% reduction in average sector length in the period, unit cost as measured by Cost per Available Seat Kilometre (CASK) was 16.6% higher than the previous year. CASK excluding fuel and foreign exchange differences (controllable CASK) increased just 5.5% over the previous year despite the significant reduction in average sector length.

Tony Davis, President and Group CEO, said: “We are pleased by the results posted by the Group for the first quarter of the new financial year. In particular, recording year-on-year unit revenue improvement in the midst of increased seat capacity in both Singapore and Australia is satisfying and highlights the robustness of our low-cost low-fare model.

“Our focus on lowering cost was reflected in the unit cost metrics that we recorded for the quarter. In fact, total cost per seat decreased by 0.8% compared to the same period last year, and more importantly, controllable cost per seat decreased by 10.1%, a fantastic achievement.

“Going forward, we are capitalising on the strong economic growth and visitor arrivals data out of Singapore by committing to a 40% increase in the Tiger Singapore fleet over the next six months. Four additional aircraft will support our increased frequencies to Guangzhou, Hong Kong, Jakarta, Macau and Shenzhen, and our new daily service between Singapore and Taipei.

“In addition, Tiger Airways has signed a memorandum of understanding to form a new low fare airline in Thailand with Thai Airways International. The new airline, known as Thai Tiger is expected to commence services in the first quarter of 2011.

“For Tiger Australia, we recorded year-on-year improvement in what is historically the weakest quarter of the financial year. We believe that our model of generating seat capacity at the lowest cost will allow us to charge the lowest sustainable fares in the market, and initiatives such as the development of Avalon Airport as an operating base will allow us to further reduce our operating costs,” said Tony Davis.

Recently, Tiger Airways introduced two new additional ancillary products; a priority boarding service called boardmefirstTM in Singapore, whilst the check-in process has been improved in Australia by offering web-based check-in facilities to those passengers travelling without baggage.

Over the coming months, Management’s focus will be to continue to lower the cost base, enhance the ancillary revenue stream and progress with establishing Thai Tiger.

Outlook statement from the company
The improving economic environment in the Asia Pacific region provides the basis for continued expansion of our existing operations. We intend to further grow our business through a proposed partnership with Thai Airways to establish a new low cost airline based in Thailand called Thai Tiger. To support our growth plans, we have an additional 9 new Airbus A320 aircraft scheduled for delivery during the financial year ending 31 March 2011, and we plan to return 2 of our current aircraft to their owner at the end of their respective leases. The fleet will therefore grow by a total of 7 additional aircraft, bringing the fleet size to 26 aircraft by March 2011.

In the near term, forward bookings continue to be firm and in line with the recent trend.