Tiger Airways Seeks Alliances to Boost Overseas Revenue

Tiger Airways Holdings Ltd. (TGR), a low-cost carrier partly owned by Singapore Airlines Ltd. (SIA), said it’s seeking to forge alliances with other airlines to boost overseas revenue after losses widened.

The carrier plans to focus initially on filling its planes with passengers, and then on improving yields through partnerships to raise earnings, Chief Executive Officer Lee Lik Hsin told reporters in a conference call in Singapore yesterday.

“We want to try to increase the overseas revenue contribution to our revenue base,” said Lee, who became CEO in May. “We need to market ourselves more like a network carrier rather than a point-to-point carrier. In order to grow and grow profitably, we need to expand beyond that.”

Tiger Air has grounded planes, canceled aircraft orders and exited overseas joint ventures as part of a restructuring after posting three straight annual losses. The efforts are symptomatic of the challenges budget airlines face in Southeast Asia, where competition among half a dozen carriers has pushed fares down.

Tiger Air’s loss widened to S$65.2 million ($53 million) in the quarter ended June from S$32.8 million a year earlier because of costs incurred from closing its Indonesia venture and Australia operations.

Shares of Tiger Air fell as much as 5.6 percent, the biggest intraday decline since June 23, to 42 Singapore cents and traded at 43 cents as of 9:34 a.m. in the city. The stock has fallen 16 percent this year, compared with a 5.7 percent climb in Singapore’s benchmark Straits Times Index.

Reduce Flights

The airline is also looking at reducing flights to destinations where demand has weakened, Lee said. It’s waiting for approval from authorities to strengthen the company’s partnership with Scoot, the long-haul budget carrier of Singapore Air, he said.

“Much of the issues and much of drain came from some of these joint ventures which we were not able to make work,” Lee said. “With the exit from these joint ventures, everyone in the company is feeling confident that we are in a good position.”

The airline filled 84.7 percent of its seats in the quarter, compared with 83.9 percent a year earlier. Capacity is expected to remain little changed this year, the company said without elaborating.

Tiger Air is considering options for four aircraft that were returned after its Indonesia venture closed earlier this month, including selling them, Lee said. The company said earlier this year it plans to ground eight aircraft in the 12 months ending March.

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net Terje Langeland, Garry Smith

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.