Tiger vows to keep flying

June 15, 2009
Singapore Democrats

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Herald Sun

Tiger airlines chief Tony Davis says the low cost carrier’s local operations are throwing off enough cash to give it confidence to continue its push into the Australian market.

But he admits Tiger is not yet profitable and declines to say when there will be black ink on the airline’s balance sheet.

“We are not breaking even yet, but the key thing for us is that we have demonstrated that the business is cashflow positive,” he told BusinessDaily in a phone interview from Singapore.

“We are generating enough cash from our Australian operations to give us confidence to keep running the business.

“We haven’t had to go to our shareholders for funds. And that indicates the business is generating enough cash.”

Mr Davis acknowledged how tough the market had been since Tiger launched 18 months ago in Australia.

Record fuel prices and customer flack caused by poor client relations have not helped the company’s image.

A decision to keep Tiger’s call centre staff on hard-to-reach telephone lines in Singapore proved disastrous.

“Some of the cost assumptions we put together were clearly wrong,” Mr Davis said.

“What we have done now is to put more services into Australia.”

Tiger will soon include daily services from Melbourne and Adelaide to Sydney.

The airline has also chosen to have the heavy engineering checks on its fleet of six A320 commuter jets carried out in Melbourne, whereas it would have been done at low-cost engineering workshops in Asia.

“And, we have also shifted customer relations into Australia,” Mr Davis said.

However he became defensive when asked why Tiger’s recently issued full-year traffic results were written in percentages and not hard numbers.

“What we are not going to do is to lay out in graphic detail exactly how well we are doing and what routes are performing best,” Mr Davis said.

“That would allow Qantas and Virgin Blue to start picking our business to pieces.”

While Tiger’s results for Asia and Australia show full-year seat capacity soared 43.1 per cent and that gross revenue was up 25 per cent during the past year, no one knows how these percentages translated to real earnings.

Tiger is a privately owned joint venture between Singapore Airlines, Irish-based discounter RyanAir with a third party US investor and, therefore, is not obliged to make its accounts public.

http://www.news.com.au/heraldsun/story/0,21985,25635708-664,00.html