Tigerairways

Tigerairways: According to Reuters, Indonesia’s budget airline Citilink (owned by Garuda Indonesia) has given up plans to acquire Tigerair’s 35.8% stake in Tigerair Mandala. The loss making ‘’Tiger’’ had been on prowl for potential suitors to divest off its stake, as it seeks to reduce its overseas exposure and focus on turning its flagship Tigerair business around. According to unnamed sources, Citilink had weighed the effects of a potential acquisition over the last few weeks, and had concluded that an acquisition would not make sense, as acquiring Mandala would not significantly give it an advantage over market leader Lion air, nor improve its network. We note that in Tiger’s recent 4QFY14 results, the carrier sank deeper into the red in 4QFY14, as net loss widened to $95.5m from $15.4m a year ago. This marks the budget carrier's third consecutive year of losses. Going forward, Tigerair views a challenging outlook ahead amid the over-supply of capacity in the region, and guides for its yield and load factors to remain under pressure. Tigerair currently trades at 1.87x P/B, against its profitable peers Cebu Air (1.67x P/B) and AirAsia (1.34x P/B).