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The Singapore Airlines-backed Tiger Airways has revealed that its Australian subsidiary has racked up $A79.3 million of losses in its first two years, outstripping the losses of its Singaporean parent in its first six years of operation.
The low-cost airline’s release of the preliminary prospectus for its planned listing on the Singapore Exchange shows it has hemmed in the huge losses it suffered last financial year, thanks largely to the fall in fuel costs.
Tiger, which started domestic services in Australia in November 2007, posted a $S8.3 million ($A6.7 million) loss in the six months to September 30 for all its operations.
This compares well with $S50.8 million of losses in the year to March 31, which, despite a profit from operations in Singapore, included a $A50.1 million loss from Australia.
But Tiger said it was ”well positioned to increase market share in Australia as a result of [its] lower cost base and attractive fares”.
Tiger said its Singapore operations had posted $S77 million of losses. The airline said there was ”no assurance” the losses could help offset its future tax bills once it was listed.
Under the planned initial public offering, Singapore Airlines intends to maintain its 49 per cent stake, while the Bill Franke-headed Indigo Partners and Ireland’s Ryan family have indicated that they will sell down their holdings.
The Singapore Government’s investment fund, Temasek, will also maintain its stake.
Despite being helped by the fall in fuel costs, Tiger’s seat revenue was flat in the six months to September 30. This was largely a result of heavy discounting, which saw Tiger’s average fares fall from $S110.60 to $S74.30 over the year.
According to some reports, Tiger is expected to raise as much as $S250 million from the IPO, which will be used to pay its $S100 million of short-term bank debts and fund its expansion plans in the Asia-Pacific region.
The airline also revealed it had amended the service agreement of its chief executive, Tony Davis. Under his new contract, Mr Davis will get a fixed salary of $S600,000 a year and a bonus of up to half his base salary each year. Mr Davis is also set to have a 2 per cent stake in Tiger when it lists.