Tiger Airways Holdings Limited (Tigerair) released a series of announcements this morning. Firstly, Tigerair reported a 10.5% YoY decline in its 2QFY15 revenue to S$146.7m and a 21.1% drop in its 1HFY15 revenue to S$315.7m, representing 96.2% of our forecasted 1HFY15 revenue. Tigerair also put in provisions of, 1) the previously announced S$93m relating to the sublease of its 12 grounded aircrafts, 2) an additional S$6.3m for a further two to four aircraft that may potentially be subleased and 3) S$59.8m for the divestment of Tigerair Australia. This led to Tigerair reporting an after tax loss of S$182.4m.
Secondly, Tigerair has signed an agreement with Virgin Australia to sell its remaining 40% stake in Tigerair Australia for AUD1 and will continue to receive franchise revenues. Lastly, Tigerair also announced its plan to raise up to S$234m through a renounceable 85 for 100 rights issue with 1.2b new ordinary shares at an issue price of S$0.20 per rights share (16-Oct closing price: S$0.325). Singapore Airlines (SIA) has also announced to undertake to subscribe for its pro rata entitlement, and also subscribe for excess rights shares, up to a total of S$140m. SIA’s plans to convert its perpetual convertible SIA’s plans to convert its perpetual convertible capital securities holdings into shares will raise its stake in Tigerair from 40% to ~55% before the rights issue and stated it will not be making a general offer upon the conversion.
Pending more details from management via analyst conference later today, we continue to put our Sell rating and fair value of S$0.35 under review.
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