The Singapore LCC sector Part 1: Tigerair's losses in FY2015 should reverse as capacity is cut
Tigerair's pan-Asian vision is in abeyance. The Singapore-based LCC has reported more losses for the quarter and year ending 31-Mar-2015. The group has now been in the red for four consecutive years, accumulating losses of over USD500 million.
But Tigerair's outlook for the fiscal year starting 1-Apr-2015 (FY2016) is brighter as the group closed or sold its highly unprofitable overseas joint ventures in FY2015 and restructured its Singapore operation. The group also reduced the size of its fleet in FY2015 by subleasing aircraft and cancelling orders, a painful but necessary exercise. Tigerair is now planning to sell two more A320s in FY2016 as it reduces its operating fleet to only 23 aircraft.
Tigerair Group's current seat capacity in Singapore is down by about 16% compared to May-2014, with nearly all the reductions occurring on competitive routes as Tigerair has been launching new routes which are not served by other LCCs. Total LCC capacity in Singapore also has been reduced, enabling Tigerair and other carriers to boost load factors and yields. But Tigerair continues to warn of overcapacity and intense competition in the Singapore market, which could impact its ability to complete a turnaround and become profitable in FY2016.
This is Part 1 of CAPA's analysis of the Singapore LCC sector.
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