Tigerair to rack up bigger losses until 2015

DBS raises loss estimates for battered airlines.

After Tigerair's announcement over the weekend of a net loss of S$118.5 million in 3QFY14, research firm DBS said that the airlines is facing bigger losses in FY14/FY15.

DBS pushed up its loss estimates for Tigerair in FY14/FY15 from S$80m/S$22m to S$124m/S$53m, respectively, taking into account current yield pressures at Tigerair Singapore and slower-than-expected improvements at key associates.

Tigerair has been implementing a slew of strategic initiatives, but it seems these are not yet making a big positive effect, said DBS.

DBS specifically pointed to TigerAir's strategy to expand its network while maintaining an asset light strategy to maximise returns, which led the Group to partially divested its stake in Tigerair Australia and its entire stake in Tigerair Philippines. TigerAir also picked up strategic collaborations and interline agreements with Scoot in Singapore, Spicejet in India and Cebu Pacific in the Philippines. Meanwhile, it has also signed a JV with China Airlines to set up an LCC in Taiwan to extend its network to North Asia. It will initially take a 10% stake in the airline and inject three aircraft from the six scheduled for delivery in FY15.

"We have yet to see these initiatives make an impact on either load factors or profitability of parent or associate airlines," said DBS.

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