Tiger Airways Australia continues to bleed money
Have the Singaporean owners of Tiger Airways Holdings sold Virgin Australia the bath water and kept the baby? Going solely on the latest financials, they have.
Tiger Australia lost $SG 12.9 million in the three months to 31 December, helping to drag down a profitable Tiger Singapore which made $27.2 million profits after tax in the quarter.
Overall Tiger Airways Holdings, which currently owns all of Tiger Australia, made $2 million in the three months, a figure which in part also reflects a loss of $8.3 million in the Philippines low cost carrier SEAir, and an unquantified loss in Mandala in Indonesia, because the current value of the Tiger investment in that operation appears on the books as $US 1. (All other figures are in $ Singapore.)
In advance of a conference call later today this is the summary of the Tiger Australia performance during the quarter.
Virgin Australia is seeking regulatory approval to purchase 60% of Tiger Australia, and to operate it as an independent stand alone low fare carrier with no marketing contact with the Virgin brand. A shareholders meeting seeking their approval for the proposed deal will be held next Thursday.
The ACCC is officially sceptical as to whether it should allow Virgin Australia the same control of a low cost brand as is the case with Qantas and Jetstar.
The problem that Tiger and the much larger Jetstar operation have in common is the fierce capacity and price competition that is raging between the full service brands of Qantas and Virgin Australia.
That fare fight is hurting Jetstar much less than Tiger, and as far as current guidance from Qantas is concerned, Jetstar continues to be profitable, although the basis for that claim is under siege from some quarters which claim that at least until recently, many of Jetstar’s costs were unfairly being carried by the Qantas long haul operation, part of which will be given to Emirates at the end of March as far as the kangaroo routes to Europe are concerned.
The full Tiger Holdings figures for the quarter include an update for the nine months to the end of December, in which the group lost $30 million after tax compared to a loss of $87.9 million in the corresponding first three quarters of its previous financial year.