Tiger Airways

Tiger Airways: Australia's regulators have given Tiger the green light on its proposed 60% stake sale of Tiger Airways Australia to Virgin Australia. An approval of the sale of Tiger Australia may be a positive as the Company has been undergoing yield deterioration from the intense competition within the Australia domestic market, putting a drag on the Group’s earnings. Tiger Airways will get S$120m one-time gain on disposal of Tiger Australia. Both Tiger Airways and Virgin Australia have committed to invest a further A$62.5m to fund growth in Tiger Australia. Tiger Australia will pay Tiger Airways an annual licence fee based on % of revenue for 20 years. However, the future strategy for SIA is questionable, as Tiger’s unique advantage was within its Australia domestic operations. A quick check aross Tiger, Silkair and Scoot websites shows that Tiger has only 5 unique destinations it flies to (ex-Australia domestic flights), out of its 38 destinations. Including Tiger Australia, Tiger has 14 unique destinations. The 5 remaining unique destinations after Tiger Airways sells a 60% stake in its Australian operations will be mainly in Philippines- Bacolod, Boracay, Puerto Princesa, Iloilo, Tacloban; OCBC has a SELL rating, with TP of $0.63.