Tigerair expects its business to continue bleeding in the fourth quarter of fiscal 2014, even as it announced a net loss of Singapore dollar (S$) 118.5 million ($92.6 million) for the three months ended 31 December.
Its net loss for the first nine months of the financial year more than quadrupled to S$127.5 million, from S$30 million a year ago.
Its home base Tigerair Singapore alone saw an operating loss of S$8.8 million in the quarter, a reversal from the S$17.9 million profit last year.
The carrier said that despite a 9.2% increase in traffic, its revenue fell by 2.9% as yields dropped 11.3%. Load factor also saw a 9.8 percentage point dip to 75.8% as capacity expansion outpaced traffic volume growth. It needed a load factor of 85% to break even.
Tigerair Singapore’s fleet will however continue to grow, despite the excess capacity, as it is due to take delivery of a new Airbus A320 this quarter. It is also scheduled to absorb two A319s from Tigerair Philippines’ fleet upon the completion of the airline's divestment to Cebu Pacific.
In a results call with reporters, its chief executive Koay Peng Yen says the carrier is looking at consolidating some of its flights and reducing reduce capacity in overcrowded markets such as Thailand and Indonesia. These capacity could then be reassigned to “strong markets” such as India and China.
Koay adds that to better utilise its aircraft, the carrier could also cut flights during off peak periods. Its aircraft utilisation rate for the quarter was 12.9 hours daily.
Calling the group’s third quarter results “clearly unsatisfactory”, Koay says he understands that there is much to be done especially in Singapore and Indonesia. The group is attempting an alliance strategy guaged to grow its regional footprint in a “capital efficient manner”.
Tigerair has entered into a 10:90 joint venture with China Airlines to establish a Taiwan-based budget carrier, due to be launched by end 2014. It has also signed an interline agreement with SpiceJet, and another with Scoot to enhance cooperation potentially in areas such as joint pricing, scheduling and marketing of routes.
It is expecting its divestment of Tigerair Philippines to Cebu Pacific to be complete by the end of the financial year.