Tiger Air: More downgrades from the Street.
CIMB, DMG cut TP to $0.71, $0.76 both from $0.92, reiterate Sell.
Citi maintains Sell and TP $0.83, notes worst is not over yet...
Australia’s aviation regulator CASA said it will seek to keep Tiger grounded until 1 Aug due to ongoing safety concerns. Based on Tiger’s guidance of $2m/wk of direct financial impact resulting from the suspension (if successfully enforced), this may cost Tiger at least $9m in total, not incl the indirect financial impact from damaged brand reputation...
Other analysts have placed the total bill from lost ticket sales, refunds and other costs for the 30-day suspension period at a higher $30m.
Australia’s consumer regulator also said it would launch court actions to fine Tiger up to A$1.1m for each instance of misleading conduct. Tiger was previously warned about selling tickets to consumers on flights that now look like will never take-off...
In addition, Tiger will have to repay the A$2.25m it received from the Australian govt to base some planes in Adelaide.
As of now, Tiger’s total damages could amount to some ~$34m, compared to FYMar11 net profit of $40m. Australia contributed to 45% of Tiger’s revenue last fiscal yr...
In the wake of this, Tiger Australia’s CEO, Crawford Rix will leave the co at end July, and will be replaced by Tony Davis, the CEO of the listco. Chin Yau Seng, ED of Tiger Air and ex-CEO of Silkair, will takeover as group CEO.
Stock trades at 13.6x P/E, 2.9x P/B.
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