Singapore Airlines 2015 Annual Report Download - page 45

Tigerair
The year under review was a diicult one for
Tigerair, as it was impacted by overcapacity in
the region, which resulted in pressure on yields.
In the face of the challenging environment,
Tigerair went through a series of diicult but
necessary decisions to turn around its financial
performance. These included stemming of
further losses from overseas ventures, shedding
of surplus aircra, capacity management for the
Singapore operations, and strengthening of its
balance sheet.
The execution of the turnaround plan delivered
encouraging results as the business recorded an
improved operating performance in the second
half of the year, where the recovery came mainly
from stronger yields and load factors, aided by
lower fuel prices.
Tigerair Mandala ceased operations in July
2014, while Tigerair Australia was fully divested
to Virgin Australia in February 2015. Tigerair
Philippines had already been divested to Cebu
Pacific at the end of the last financial year. Tigerair
was then burdened with surplus aircra that
were previously operated in Indonesia and the
Philippines.
Tigerair subleased 12 aircra to InterGlobe
Aviation Limited. This was in addition to one
aircra subleased to Tigerair Taiwan during the
year. Tigerair plans to sublease one more aircra
to Tigerair Taiwan and sell two owned aircra in
the new financial year.
The subleasing and sale of surplus aircra enables
Tigerair to focus on improving yield and load factor,
with its operating fleet of 24 aircra as at 31 March
2015, and a further adjustment to 23 aircra at the
end of the new financial year. Capacity management
involved removal of weak routes, while frequencies
were increased to other points. New destinations
were also added to the network, the latest addition
being Ipoh where services began in May 2015.
The strengthening of Tigerair’s balance sheet
through the rights issue completed in January
2015 placed the airline on a firmer footing
to execute its turnaround plan. The rights
issue exercise garnered strong support from
shareholders. Net proceeds of the rights issue
amounted to approximately $227.4 million.
Following the conversion of perpetual convertible
capital securities to ordinary shares and the
completion of the rights issue, SIA’s stake in
Tigerair was raised from 40 per cent to 55.8 per
cent. Tigerair became a subsidiary of SIA during
the third quarter of the financial year. At the same
time, the Competition Commission of Singapore
gave approval for merger control, which eectively
allows all forms of collaboration between Tigerair
and the SIA Group. Tigerair and Scoot had already
engaged in deep co-operation since August 2014,
and this is now extended to the rest of the SIA Group,
an example of which is Tigerair’s participation in
SIA’s KrisFlyer frequent-flyer programme.
Going forward, there continues to be surplus
capacity in the industry which would place
downward pressure on yields. Nonetheless,
Tigerair expects to continue making headway
in its turnaround eort.
37
DESTINATIONS
across 12 countries
FLEET OF
24
A320-200s
In the face of
the challenging
environment,
Tigerair went
through a series
of diicult
but necessary
decisions to
turn around
its financial
performance.
Singapore Airlines | Annual Report FY2014/15 | 43