Tiger Air: recent mgt changes and a short booking profile suggest an increasing likelihood of a withdrawal from the loss-making Australian operations.
i) Tiger’s previous Group CEO Tony Davis, who has just recently been running Australia, will leave the Group on 1 Nov
ii) Tiger has recently appointed Chin Yau Seng (from SIA) as new Group CEO
iii) Tiger continues to not accept bookings for any of its flights beyond 30 Oct, despite commencing the Melbourne-Perth route from 7 Sep.
Credit Suisse notes, to deliberately shorten the booking profile is difficult to understand for a business committed to the domestic market.
Tiger Australia contributed 45% to sales in FYMar11, but made a $9m operating loss vs operating profit of $47.2m at the Group level. Expect Tiger’s losses to widen significantly this year due to the 1-mth flight suspension in Australia.
The majority of the Street has Sell and Hold ratings with TP ranging btwn 0.54 – 0.90.
Stock trades at 27.3x P/E, 3.1x P/B vs larger peer AirAsia’s 10.3x P/E, 2.4x P/B.
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