Tiger Airways

Tiger Airways: News reports from Reuters indicate that Tiger Airways could be looking for a sale or closure of its Indonesian JV, PT Mandala Airways, unless there are signs of a turnaround this year. According to unnamed sources, Tiger and Indonesian private equity firm Saratoga, which owns 51% of the JV are now unwilling to invest further in the JV, The news comes a month after Tigerair Mandala suspended nine routes, representing about 40% of its capacity, which comes in contrasts to larger competitors Lion Air and Garuda Indonesia, who are currently adding planes to more destination within Indonesia. A potential exit in Indonesia, would mark Tiger’s second exit in a country this year, following the carrier’s decision to sell its loss-making Philippine business to Cebu Pacific in January. To re-cap, in its recent 3QFY14 results, the ‘ailing tiger’ continues to bleed, with no signs of a quick turnaround. For 3QFY14, the budget carrier turned in a net loss of $118.5m, reversing from a $2m profit in the same period last year, widening its 9MFY14 loss to $127.5m vs $30m in 9MFY13. Bottom-line was dragged by exceptional charges of $88.3m, including a $30.3m loss arising from the planned disposal of Tigerair Philippines and $58m impairment on associates. Given the challenging operating landscape, and the failure to remain profitable in the traditional peak season, most houses appear unconvinced that ‘The Flying Cub’ would be able to turn around its fortunes anytime soon. Based on its latest NAV of $0.39, Tigerair currently trades at 1.05x P/B with a net gearing of 32%. The street has 1 Buy, 1 Hold and 8 Sell call ratings on the counter with a consensus TP of $0.40.