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The parent of Australian low-cost airline Tiger Airways sunk to a loss of about $S28 million ($A22 million) for the year to March, in a sharp reversal on the previous year’s $S10 million profit.
The result for the Singapore Airlines-backed Tiger Aviation indicates that its Australian operations are still suffering large losses as it tries to establish a position in the domestic market. Tiger Aviation is the parent of Singapore’s Tiger Airways and Tiger Airways Australia.
The privately owned airline is yet to lodge its annual accounts with Singaporean regulators but it has emerged that Singapore Airlines’ share of Tiger’s cumulative losses increased by $S14 million, or 44 per cent, to $S45 million for the year to March 31. Given it owns 49 per cent of the low-cost airline, Tiger lost about $S28 million for the period.
Singapore Airlines yesterday dismissed speculation that it had injected more capital into Tiger Aviation. But the biggest shareholder said it had stopped accounting for its share of further red ink at Tiger after accumulated losses exceeded its cash contribution of $S39 million.
Tiger Airways Australia did not respond to questions yesterday about its performance, saying only that it would be ”announcing our results shortly”.
The parent’s Singapore-based chief executive, Tony Davis, has been upbeat about the airline’s performance in Australia but recently conceded it is still losing money.
In February, Australia’s fourth-biggest airline brand belatedly released its accounts for the year to March 31, 2008, which showed losses of $20 million. The figure included about $8 million in start-up costs in Australia.
Tiger has recently shifted its focus towards high-traffic routes, after a strategy of stimulating regional routes when it launched in Australia two years ago.
The airline signalled its intention to challenge Qantas, Jetstar and Virgin Blue in July when it began services on the country’s busiest route between Sydney and Melbourne. Since then it has announced services between Sydney and the Gold Coast and Melbourne and Brisbane.
But industry insiders have been sceptical of Tiger’s ability to service 18 routes in Australia with just seven A320 aircraft.
Tiger Aviation’s other main shareholders are private equity firm Indigo Partners and Ireland’s Ryan family, of Ryanair fame.