Tiger Air

Tiger Air: signs MOU with long haul low cost carrier Scoot, to cross sell “join itineraries” – a single ticket for travel between Australia (Sydney, Gold Coast) and Asia (Phuket, Ho Chi Minh City, Kuala Lumpur), via Singapore. Although a single ticket will be issued for all flights, at this point, passengers will still have to pass through customs and immigration and check in again for the second leg of the journey. Credit Suisse believes this is a positive long-term development for Tiger, but views the initial impact to be muted given the limited number of destinations initially. Believes fees from a future ‘transfer’ service between flights (no need to check in twice) could significantly enhance revenues from this partnership. Nevertheless the house expects this to have a meaningful impact only in FY14 and beyond. Adds, the share price more than reflects Tiger's recovery prospects, which have been clouded by intensifying price competition in Australia. Maintains Underperform with TP $0.70. DMG also believes any earnings impact will be minimal at this point in time as the rise in load factor will be offset by lower yield assumptions on short term competitive pressures. Raises TP marginally from $0.75 to $0.76, but downgrades the stock to Neutral on valuation grounds. CIMB maintains Neutral with TP $0.81.