Tiger Airways

Tiger Airways: Tiger adopted an asset-light regional alliance strategy to accelerate growth, improve asset utilisation and return to profitability; its latest alliance involves its exit from the Philippines market, in favour of an alliance with Cebu Pacific. Tigerair Mandala could be up for sale according to Reuters (03 March), although this has been denied by Tigerair and local partner Saratoga. Nonetheless, we believe that an exit from Mandala should help stem annual losses estimated at over $20m. Tigerair Singapore will take on two more aircraft upon the exit from the Philippine JV, which will add to the over-capacity issue in Singapore. On the back of larger associate losses and weaker fares, CS now expect Tigerair to slip into losses in 2014-15E and cut 2016E EPS by 85%. With these changes, CS lowers TP to $0.32 (from $0.47) and maintains UNDERPERFORM rating.