Tiger caged as Jetstar preys on rivals
MELBOURNE – Jetstar is turning the screw on Tiger Airlines at a time when the Singapore-backed carrier is continuing to bleed red ink on its balance sheet.
Tiger took a $S50.1 million hit last year as it struggled to take a share in the Australian domestic market.
The costs of servicing Australian skies also took $S20 million from the parent company’s reserves, leaving the business with just $S13.2 million in available cash.
The group loss for Tiger Singapore and subsidiary airline Tiger Airways Australia for 2008-09 amounted to a $S50.8 million, reversing the previous year’s $S9 million profit.
The yearly accounts, filed nine months late, revealed that the company had owed more than it owned, with liabilities at the end of March exceeding assets by $S109 million.
The airline declared an operating profit of $S12.0 million, its second profit in a row with a $3 million improvement on the year before.
Tiger boss Tony Davis said the Australian business was negatively impacted by the adverse impact of record oil prices and foreign exchange volatility.
Tiger is reported to be planning an initial public offering in January to raise about $500m.
The company, which is 49 percent-owned by Singapore Airlines, is understood to be planning to sell up to 51 per cent of its shares, which would value the airline at about $S1bn.
The funds would be used to finance expansion, including new Airbus A320 aircraft.
Meanwhile low-cost rival Jetstar has unwrapped its biggest increase in domestic capacity in Australia since its first flight in 2004.
Jetstar will take delivery of four new jets and add 77 return services a week to holiday destinations.
The Qantas sibling said the decision meant it would be able to offer 700,000 extra seats between the capital cities, the Gold Coast and other destinations in Queensland.
The airline said the extra seats would reinforce the dominance of the Qantas group, which has 65 percent of the Australian domestic travel market, ahead of Virgin Blue and minnow Tiger.
The services, to commence between March and July, are a “direct response to continued strong consumer demand,†said Jetstar CEO, Bruce Buchanan.
In a separate statement Jetstar also said it will commence four times weekly services between Sydney and Fiji from March 29.
Ian Jarrett
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