Tiger: DBSV reiterate its view that Tigerair is poised to see its earnings recover firmly this year, driven by higher yields on capacity discipline, and lower jet fuel costs.
Having jettisoned its lossmaking associates and taken painful write-offs, and with the support of parent SIA, house projects Tigerair to return to a full-year profit of $39m and $55m in FY16 and FY17 respectively, after four consecutive years of losses.
Tigerair has hedged 40% of its jet fuel requirements from Apr 2015 to Jun 2016 at an average of US$94/bbl, which suggests that the Group should see a more significant boost from lower fuel costs ahead, especially from 2H15 onwards.
Closer relationship with SIA is also a positive. Tigerair is also now a 55.8%-owned subsidiary of SIA, and has a closer working relationship with SIA, such as the interline cooperation with Scoot and inclusion in the KrisFlyer programme, should lead to greater benefits in the long run.
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