TIGER AIRWAYS POSTS PROFIT AFTER TAX OF $2 MILLION FOR THE QUARTER ENDED 31 DECEMBER 2012

Tiger Airways Holdings Limited has posted a profit after tax of $2.0 million for its third financial quarter ended 31 December 2012 (3Q FY12-13), versus loss after tax of $17.4 million in the previous corresponding period (3Q FY11-12). This was on the back of a 47.1% rise in 3Q FY12-13 Group revenue to $247.7 million, from $168.4 million recorded in 3Q FY11-12.

The revenue improvement was largely driven by an increase in passenger traffic (41.6%), stronger yield (3.5%), and higher load factor (+5.7 percentage points to 84.6%).

In line with passenger traffic growth, total expenses in 3Q FY12-13 were higher year-on- year, rising 26.7% to $229.8 million.

Mr Koay Peng Yen, Group CEO of Tiger Airways, said, “We are encouraged by the turnaround in this quarter. However, we are mindful that the September to December period is traditionally the strongest quarter for the air travel industry, and this has also contributed positively to our performance. We will continue to put in our best effort to keep up the Group’s recovery momentum.”

For the nine months ended 31 December 2012, Group loss after tax contracted to $30.0 million, from $87.9 million recorded in the same period a year ago, on a 36.9% increase in revenue to $625.6 million, from $457.1 million a year ago.

Operations Review
Tiger Singapore posted a revenue of $173.0 million, and an operating profit of $27.0 million for the quarter, compared to revenue of $128.5 million and a loss of $4.8 million for 3Q FY11-12. Passenger traffic grew by 27.7% year-on-year, while load factor increased 7.9 percentage points to 85.6%.

Tiger Australia posted a revenue of $72.6 million, and an operating loss of $12.9 million for the quarter, compared to revenue of $40.3 million and operating loss of $8.6 million for 3Q FY11-12. The widening of losses was largely due to a 11.5% drop in yield due to stiff competition in the domestic market, and rising costs of operations. Passenger load factor was fairly stable at 81.9%, despite the doubling of capacity to 958 million available seat kilometres. Total expenses rose by $36.6 million, or 74.8%, to $85.5 million, as the airline commenced new routes during the quarter, connecting Sydney and Melbourne to Adelaide, Cairns, and Mackay.

Share of loss from associate airline, SEAir, amounted to $8.3 million for the quarter, as the relatively young airline continued to build its presence among larger competitors in a competitive market arena. SEAir currently operates a fleet of five aircraft. New routes will be progressively added to SEAir’s network, which now covers four international routes out of Clark, and seven domestic routes out of Manila. This will enable SEAir to reach out to a growing business and leisure travel market in the Philippines.

The Group’s cost of investment in its other associate airline Mandala is US$1. Thus the Group has not recognised its share of cumulative losses in Mandala amounting to $14.3 million as at 31 December 2012. Mandala currently owns a fleet of seven aircraft, with its sixth and seventh aircraft expected to commence operations in the coming quarters. It started four new routes in December, connecting Padang and Denpasar to Singapore and other major cities in Indonesia. The airline will also be commencing new routes between Pekanbaru and Singapore, Jakarta and Medan in February 2013.

Outlook
The quarter under review is traditionally the strongest quarter in the air travel industry. Looking ahead, the Group’s operating performance in the fourth quarter is expected to be weaker. The Group expects to report an operating loss for FY12-13.

Reflecting sustained demand for its services, the Group registered healthy load factors over the past months even as it increased its overall capacity. Tiger Singapore’s recent launch of tigerconnect – a seamless and hassle-free transfer service jointly provided with Changi Airport Group – should facilitate an overall growth in passenger volumes in the ensuing months. On the other hand, keen competition among low cost carriers in the region and the Australia domestic market will continue to pose a challenge for the Group to improve its yield.

To strengthen its position in the industry, the Group plans to expand its overall capacity. Such growth is expected to occur through increased flight frequencies on routes that enjoy higher demand, as well as through calls at new destinations, with particular focus on South East Asia and China.

The proposed divestment of a 60% stake in Tiger Australia to Virgin Australia is currently pending regulatory approvals by the Australian Competition and Consumer Commission and Foreign Investment Review Board. The Group will convene an extraordinary general meeting on 31 January to seek shareholders’ approval for the transaction.

Associate airlines, Mandala and SEAir, continue to face challenges in their respective markets, and are unlikely to contribute positively to the Group’s performance for FY12-13. Nonetheless, the longer-term potential of the Indonesia and Philippines air travel market is promising. Mandala and SEAir will work towards increasing their share of the respective markets through possible partnerships with industry players, the introduction of new routes, and improving customer experience.