Tigerair

Tigerair: Singapore operations improved q/q in 1QFY15 on the back of peak travel period and active capacity management – passenger load factor (PLF) edged up by 7.1ppt from 79.2% in Mar-14 to 86.3% in Jun-14. On a Y/y basis, PLF increased for the first time in nine months by 1.8 ppt in Apr-14. OCBC believes improved PLF Y/y can be sustained in FY15 because: 1) tigerair will not be taking on plane deliveries in 2014-2015, 2) we think the four planes returning from now-defunct Tigerair Mandala will be grounded, and 3) near-term fleet expansion is scaled back by rivals Jetstar Asia and AirAsia. OCBC thinks improved PLF will only help TR’s performance to bottom out but insufficient for a turnaround; downward pressure on yield will stay as SE Asia’s LCC fleet is projected to grow by a high 17% in 2014 according to CAPA. OCBC maintains Sell with TP of $0.30.