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Tigerair shares down on widening losses

Article By: ,  Financial Analyst
May 6, 2014 1:15 PM

The share price of Singapore-based Tigerair fell badly yesterday (May 5th) following the release of the company's latest financial results.

After the firm announced that its losses rose to $96 million Singapore dollars (£45 million) during the January-to-March quarter, stocks in the firm dropped by between eight and nine per cent.

Losses were revealed by the company to be significantly up from S$15 million during the same period a year earlier, with investors responding negatively to the news.

"Due to an industry over-supply of capacity, Tigerair continues to operate in a challenging business environment," Tiger said in a statement. "It is expected that yield and load factors will remain under pressure."

Competition

Although Tigerair is partly owned by Singapore Airlines, the airline has been badly affected by growing competition in the sector in the Far East, which has resulted in widening losses.

Group chief executive officer Koay Peng Yen stated that the company has tried to "clear the deck" in the last 12 months in a bid to put the business on a firmer financial footing for the future.

He said: "The divestment of our overseas units and provisions for future charges ensure that the company can start off on a better footing in the new financial year. We have also proactively addressed excess capacity issues faced by the group.

"In fact, the industry as a whole needs to reflect on the toll that overcapacity has created. We recognise that the restructuring of Tigerair is not an overnight process and we are working very hard at executing our turnaround strategy. We are leaving no stone unturned."

Dozens of airlines are now fighting for space in the increasingly crowded industry in the Far East and companies such as Tigerair have found it harder to stay relevant and continue to attract consumers in an area of ever-lowering prices.

In early trading today, the share price of Singapore Airlines is down by 0.10 per cent on the SES.

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