Tiger Airways

Tiger Airways: Credit Suisse maintains UnderPerform with $0.74 TP. House had meeting with new CEO and note that new CEO Mr Koay Peng Yen's key focus is Tiger's return to profitability. There will also be an emphasis on improving customer satisfaction and brand building. Under CEO Koay, Tiger will not slavishly follow the 'pure' LCC model. Initiatives to maximise shareholder return include expanding 'Flight Combo' sales of multiple flights on a single ticket (i.e., Colombo-SIN, SIN-Perth) to cross sell with Tiger's overseas units and eventually to third parties, including Scoot. Tiger said its ancillary/revenue ratio flatter to deceive, given its artificially low fares. Thus, Tiger will no longer price its fares close to its seat cost to spur demand and launch new initiatives (prebooked meals, etc.) to improve ancillary income. A $1 increase in the fare/ancillary spend raises FY13-14 NPAT by 12%-22%. The share price more than reflects Tiger's recovery prospects, which have been darkened by intensifying price competition in Aus. Moreover, the new initiatives will only start to have a meaningful impact from FY14.