Tiger flags Australian expansion in IPO

(AAP) - Singapore-based Tiger Airways Holdings Ltd has flagged using proceeds from its initial public offer to fund an expansion of its Australian operations.

The airline confirmed the details of its IPO on Wednesday, which will offer 165.155
million shares at $S1.65.
Total net proceeds were expected to be about $S246.8 million ($A192.3 million).
It would be the first low-cost carrier to list on the Singapore Exchange.
Tiger Airways president and chief executive Tony Davis said taking the company
public would help the airline "embark on the next stage of growth", with the fleet
expected to more than triple from 17 Airbus planes currently to 68 by 2015.
Mr Davis said Tiger would use the cash to not only buy additional planes, but also
create "additional operating airlines" in Asia.
"We also plan to increase frequency of flights on existing routes and expand
operations by commencing new routes between the airports we now serve, as well as
add new destinations from our existing bases in Singapore and Australia," Mr Davis
said in a statement.
"Part of the IPO proceeds will be used to fund our planned acquisition of aircraft
and to establish potential new airlines and/or operating bases."
Tiger started flying in Australia in November 2007, based out of Melbourne's
Tullamarine Airport and Adelaide, and currently has 13 destinations in its schedule.
Overall, the five-year-old airline flies to 33 airports in 11 countries.
According to the prospectus, Tiger Australia recorded an operating loss of $A50.1
million for fiscal 2009, which wiped out a profit from the airline's non-Australian
operations.
This compared with Tiger Australia's operating loss of $A12.1 million in fiscal
2008, which only included five months of service.
Fat Prophets analyst Colin Whitehead said he expected Tiger to find it difficult to
pick up market share by increasing capacity.
"They are going to have to compete on price and do they really have the scale to do
that effectively? Probably not," Mr Whitehead said.
"I would have grave reservations that they are going to be able to successfully
penetrate the domestic market, when you have already got Jetstar and Virgin.
"I'm not sure the market is really open for a new entrant here."
In terms of the six months to September 30, 2009, Tiger recorded a net loss of $S8.3
million ($A6.41 million), compared with a net loss of $S25.2 million ($A19.7
million) in the prior corresponding period.
The prospectus, lodged with the Monetary Authority of Singapore on Wednesday, said
some of the money raised would also be used to pay down some short-term loans and
about $S20.4 million would be retained for working capital.
The company was scheduled to debut on the Singapore Exchange at 0900 local time
(1200 AEDT) on Friday January 22.
Confirmation of the IPO's asking price comes after Qantas Airways Ltd's subsidiary
Jetstar and Malaysian-based low-cost carrier AirAsia last week unveiled an alliance
which the parties said would generate "hundreds of millions of dollars" in savings
and result in lower fares.
At last week's announcement, AirAsia Group chief executive Tony Fernandes was asked
if his airline was looking to "take on" Tiger by linking up with Jetstar.
In response, Mr Fernandes described Tiger as "insignificant in this thing".
"We're talking about the two largest low-cost carriers in the region ... Tiger is a
loss-making entity," Mr Fernandes said.