Tiger Airways Australia in Mega Trouble

[Sunstar320]

From the SMH

TIGER AIRWAYS has missed a second deadline to lodge its full-year accounts, fuelling speculation that the Singapore Airlines-backed budget airline has failed to reveal the extent of its financial woes.
The airline has declined to explain why its holding company, Tiger Aviation, has not lodged its accounts for the year to March 31, after already obtaining a three-month extension from Singapore's Accounting & Corporate Regulatory Authority in July.
The delay comes as the airline told the Herald it could postpone the delivery of a fifth Airbus A320 aircraft to Australia by two months.
Although it said last week that bookings remained strong, it declined to provide any indication of when it planned to lodge its accounts. A Tiger spokesman, Matt Hobbs, denied the airline was in trouble. "Tiger is very happy with how things are going, and we continue to fill planes in Australia and Asia," he said.
There are suspicions Tiger's 11-month foray in Australia is still losing it millions of dollars each month.
Since the Herald reported in August that its Australian operations could have lost $S28 million ($29 million) in the four months to March 31, the airline has still failed to confirm or deny the figures. The estimated loss was arrived at by reconciling the $S37.8 million profit reported by Tiger's Singaporean operations in the year to March 31 and comments made by the chief executive of Singapore Airlines, Chew Choon Seng. He told an analyst briefing earlier this year that Tiger Aviation's profit for the year was close to $S10 million.
If so, Tiger Australia - Tiger's only operation outside Singapore - would have lost about $S28 million for the period. But given the rise in fuel prices since March 31, economic slowdown in Australia and recession in Singapore, the losses could have worsened. Tiger did not say why the introduction of two Airbus A319s to its Australian fleet of four Airbus A320s had been pushed back to January.
In March the airline's chief executive, Tony Davis, said they would be delivered in November.
The airline also confirmed it could delay the delivery of an extra A320 to Australia next month to January, and would focus instead on developing new routes from Singapore into Malaysia.
Qantas's part-owned Jetstar Asia has also failed to lodge its accounts. It was given a three-month extension to lodge its full-year accounts by Singapore authorities on September 29.

What on earth are they doing wrong...They have a cost base so low, but still lose millions. Their losses are so big, mabye a pullout might just save some money??

[Standby]

With the huge pockets of Temasek (ie SIN Inc.) covering the bills ,the previously mentioned $20-40M loss a year is peanuts, one suspects they'll be around for a long time yet

[jaffa]

I would also assume that Tiger Australia set up costs would be included at least partly in these figures.
Then there is the new planes, and deposits for more, as well as the major initial marketing and sponsorships, much of which was signed for 3 years.

The first 3 years of a new airline costs are always over the top, just think back to Virgin Blue's kick off.

I would not be to concerned.

I do believe they have prob taken a big hit on fuel costs though, but then again so has all the rest.

[Sunstar320]

An Insider told me that they are so low on crews (not pilots though) that they need to cancel flights when crew call in sick. This actaully happend this morning. 4 flights were cancelled due to sick calls, and there is not enough cabin crew to cover the loss. Also told Cabin members are also leaving after just months from starting

[JohnK]

Not really surprising. Even with the backing of the Singapore government how much longer is Tiger likely to be around in Australia? Could be time to re-book those flights....

[straitman]

Not really surprising. Even with the backing of the Singapore government how much longer is Tiger likely to be around in Australia? Could be time to re-book those flights....

They will be around for quite a while but not an indefinite period unless the balance sheet trends in the right direction.

[Soundguy]

From the SMH....

What.... do they mean to imply that Tiger is in even more financial trouble than the SMH?

[Standby]

An Insider told me that they are so low on crews (not pilots though) that they need to cancel flights when crew call in sick. This actaully happend this morning. 4 flights were cancelled due to sick calls, and there is not enough cabin crew to cover the loss. Also told Cabin members are also leaving after just months from starting

Crew moving on quickly isnt new to airlines. Even though at times its hard to believe getting in with QF/JQ/DJ isnt easy..they get swamped with ,000's of applications. Now those that joined TT on low wages have the thing that ,000's who miss out with the other carriers don't...experience as an FA. They find it easier to move to the mainline carriers where promotion and as some have pointed out here some job security.Either that or they pop off to the sandpit to work for any of the Gulf Carriers...

[Starship]

Crew moving on quickly isnt new to airlines. Now ... ...they have the ..experience as an FA. They find it easier to move to the mainline carriers where promotion and as some have pointed out here some job security.Either that or they pop off to the sandpit to work for any of the Gulf Carriers...

Still plenty of scope in the 'sand pit' as you call it from Emirates, Etihad, Gulf Air, Saudi Air......

I believe Emirates is soaking up a lot of the US pilots jumping from United / American and others to fill their demand for 1,000 new flight crew this year. And accomodation along E11 / Sheik Zayed Road (in Arabic: شارع الشيخ زايد) is still being built and needing to be filled!!

[crazydave98]

Where to begin? Let's start with the basic strategy.

• Tiger calls itself the "Ryanair of Asia" although Ryanair obviously don't feel flattered by the comparison. Most of Ryanair's airport pairs (as opposed to city pairs) are monopolies which has certain cost and market/catchment advantages. Tiger has to compete head-to-head with other airlines that have corporate travellers up front that allow them to offer cheap fares down the back. Tiger has to sell most of its fares below cost and can't sell enough above cost to keep it in the black.
• Tiger does not have any cost advantage over Jetstar - it has 3 seats more per aircraft but this is offset by its lack of scale and splitting its 12 aircraft operations over 2 AOCs (doubling overhead).
• Ryanair has huge economies of scale and just doesn't have to advertise because everyone in Europe knows its website. Tiger is too small to be on the radar here and doesn't have the cash to advertise properly.
• Ryanair operates a few hundred identical aircraft in high density configuration - 9 more seats per aircraft than Virgin Blue. Tiger has a total of 12 aircraft between SIN and AUS and is already introducing a second type. But wait there's more. This second type will have 12 fewer seats in it than easyJet has in the same aircraft, so not only do they get a higher cost aircaft and complexities of a second type that Ryanair avoids, it gets the aircraft in a high cost configuration.

So that's why Tiger is already in a big hole before the Global Financial Crisis. Now the twist is that to finance its ongoing losses, Tiger has already mortgaged its future deliveries with sale and leaseback arrangements, but it has to stump up some cash known as PDP (pre delivery payments) - and right now no-one is lending. So the reason you haven't seen Tony Davis in the press here recently is that he is frantically trying to get cash to pay for future deliveries. And to try to resurect the proposed joint venture with Incheon City which has been grounded. And to try to finalise a deal with SEair in the Philippines which also now looks like coming unstuck. If you look back to Tiger's early presentations to industry forums you will see that Australia literallly did not figure on their map when they were claiming that they would open a new base every 12 months. They only came to Australia because it was the only place they could put the aircraft thanks to our liberal aviation regulation which makes it one of a handful of countries in the world that allows fully foreign owned companies to set up a domestic airline (which is what VB was when it started).

While Temasek and SQ have very deep pockets and a long term horizon, the venture capitalists who they are in bed with do not - and have problems of their own (i.e. no cash) due to the Global Financial Crisis. So it will be interesting times in the Tiger boardroom when Tony Davis comes asking for more cash to keep the airline going - because with the recession we are going to have here and is already underway in Singapore they are going to need a lot of it. And the crews know it and are taking off for the security of other Australian airlines and the sandpit. It will be an admission of failure if Singapore Inc has to tip more money into Tiger and dilute its partners who refuse to follow suit. Interesting times.

cheers

CrazyDave98