Tigerair

Tigerair: has agreed with InterGlobe Aviation Limited (IndiGo) to sublease 12 of Tigerair’s surplus aircraft to the Indian budget carrier. This will allow Tigerair to reduce significantly reduce excess capacity. Most of the aircraft were previously operated by Tigerair Philippines and Tigerair Mandala. At the same time, Tigerair will make a one-off accounting provision of $93m in relation to this subleasing. Although the sublease is at a discount to original rates due to industry overcapacity, compared to idling the aircrafts, the sublease agreements will reduce Tigerair’s cash flow burden by a significant $162m over the sublease periods. The aircrafts will be subleased for three to four years, progressively delivered over the next six months. Following the expiry of the sublease, seven aircraft will rejoin the operating fleet, four will be progressively reintroduced, and one will see its original lease expiring in 2018 Meanwhile Tigerair is reviewing various funding operations (rights issue a possibility) to beef up its balance sheet and meet general corporate funding requirements. Tigerair is currently trading at 0.7x P/B