Tigerair in talks to sell Philippines associate airline

It owns 40% of Tiger Philippines.

According to OCBC Investment Research, an online Philippine news portal, InterAkyson, reported last Friday that Cebu Pacific is in talks to acquire Tigerair Philippines (TRP) from Tiger Airways Holdings (TR). The article quoted an executive director of the Civil Aeronautics Board as saying that Cebu Pacific has filed an application to acquire 100% of TRP.

The director also said that the CAB is evaluating the planned buyout and that the agency expects to finish the review within the next two weeks. TR has confirmed that it is in the midst of negotiating a proposed transaction involving TRP but emphasised that no definitive agreement has been signed yet. TR owns 40% of TRP.

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To recap, TRP, like TR’s two other associate airlines, Tigerair Mandala (TRM) and Tigerair Australia (TRA), has been facing persistent operational challenges, specifically the lack of demand growth, competitive fare pressures and expansion in industry capacity.

For the latest quarter, 2QFY14, losses for TRP widened to S$9.0m despite narrowing losses for the previous three quarters (-S$8.3m in 3QFY13; -S$7.3m in 4QFY13; -S$6.0m in 1QFY14). We believe that a sale of TRP should be a positive for TR, given that TRP operates in a market suffering from overcapacity.

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