Tiger Airways slammed by $50m loss

Being grounded down under was a major blow for the struggling upstart.

Tiger Airways Holdings Limited (the “Company”) today announced its results for the quarter ended 30 September 2011, the second quarter of the financial year ending 31 March 2012.

The Tiger Airways Group (“Group”) recorded a loss after tax for the quarter ended 30 September 2011 of $49.9 million, compared to a $14.1 million profit after tax for the quarter ended 30 September 2010.

Passenger numbers and seat capacity were 23.2% and 16.1% lower, respectively, in the quarter ended 30 September 2011 compared to the same period last year, due to the six-week suspension of Tiger Airways Australia’s services and the subsequent under-utilisation of its fleet as a result of its reduced flying programme. Consequently, revenue dropped 23.4% to $109.9 million from $143.5 million.

Costs increased by 12.9% in the quarter compared to the same quarter last year, which was impacted by the 47.0% increase in fuel prices compared to the same quarter last year. Unit cost metrics were impacted by the lower seat capacity resulting from the Tiger Airways Australia suspension.

The loss after tax for the half year ended 30 September 2011 was $70.5 million compared to a profit after tax of $16.0 million in the half year ended 30 September 2010.

The financial results for the quarter ended 30 September 2011 were impacted by the suspension of Tiger Airways Australia’s services, and the subsequent under-utilisation of the domestic fleet. Tiger Airways Australia recorded an operating loss of $27.2 million in the second quarter of 2012, compared to a $0.6 million operating loss in the same quarter last year.

Tiger Airways Singapore reported an operating loss of $12.0 million for the quarter compared to an operating profit of $6.8 million in the same quarter last year. Whilst revenues increased 33.2% on a 63.9% increase in seat capacity, both revenue yield and load factors were lower than last year. Further, costs increased 64.0% primarily due to the 47.0% increase in the fuel price and a 57.1% increase in the number of flights operated.

On 23 September 2011, the Company announced the signing of a share subscription agreement and finalisation of other commercial agreements in relation to its proposed purchase of a 33.0% stake in PT Mandala Airlines of Indonesia (“Mandala”). Mandala is currently in the process of satisfying conditions precedent, and the Company will provide updates to the market at the appropriate time.

Tiger Airways Australia is gradually rebuilding its business and the Company is encouraged by the load factor improvements since operations resumed. Further, Tiger Airways Australia broadly covered its variable costs post-suspension, even with the very short lead time to market the flights. 

The Group is forecasting a lower load factor in the quarter ending 31 December 2011 compared to the 88.0% load factor recorded in the quarter ended 31 December 2010. Forward bookings are being closely monitored and seat capacity will be appropriately adjusted, if required, to optimise revenue.

The Group expects to record a significant net loss for the financial year, due to the losses generated by Tiger Airways Australia as a result of the CASA suspension, and the Group’s exposure to high and volatile jet fuel prices.