Tigerair

Tigerair: reported passenger load factor (PLF) improvements in the first two months of its 2QFY15 operating statistics. OCBC thinks PLF is likely to stay above 80% for the rest of 2H14 as Tigerair continues to place focus on managing its load and increasing aircraft utilisation. However, OCBC remains concerned about its 12 grounded aircrafts as they continue to incur lease expenses. On the positive side, with the approval of the anti-trust immunity (ATI) for Tigerair-Scoot alliance (TS), Tigerair will be able to capture interlining passengers flying from Scoot’s medium to long-haul destination, through Singapore, to other parts of Southeast Asia served by Tigerair. OCBC expects the alliance to have meaningful contribution to Tigerair’s results only from 1HFY16 onwards. Hence, OCBC decreases FY15F and FY16F estimated net loss by 4.8% and 69.1% to S$103.7m and S$16.1m, respectively. Consequently, OCBC raises TP $0.35 (prev: $0.30) while maintaining a SELL rating.