Tigerair to sell stake in loss-making Australian arm

1 Dec 2014 by Clement Huang

Troubled low-cost carrier (LCC) company Tigerair Singapore (Tigerair) looks set to get rid of its money-losing Australian arm, Tigerair Australia, after shareholders voted almost unanimously to sell the 40 per cent stake that the former currently owns of the airline.

According to Tigerair chief executive Lee Lik Hsin, the low-cost carrier company will now move to sell its existing stake in Tigerair Australia to Virgin Australia for a nominal A$1 (US$0.8).

The move will allow the company to divert its efforts and resources to its primary Singapore operations.

So what will happen to Tigerair Australia? According to The Straits Times, the airline will continue to retain its branding for commercial purposes, while Tigerair will receive the rights to an undisclosed amount in franchise revenue.

It has not been a rosy year for Tigerair, after the group reported a loss of SG$182.4 million (US$139.3 million) during the three months leading up to September.

As a result, the airline will be pursuing a fund-raising drive with the hopes of raising some SG$234 million (US$178 million) to pay off existing debt and fund operations.

In addition, Singapore Airlines (SIA), which currently owns 40 per cent of Tigerair, could increase its stake to 71 per cent depending on the subscription rate. This opens up the possibility for the company to enjoy closer ties to SIA’s wholly owned LCC, Scoot.

For the meantime, Tigerair has cancelled an order for nine new planes, which were set to be delivered between this year and next. It has also leased 12 aircraft to Indian carrier IndiGo.

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Clement Huang

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