“We are Asia’s ancillary revenue leader”: Tiger Airways

Tiger Airways Holdings Limited has posted strong growth in profitability for the quarter ended 31 December 2009.

Published: 01 Mar 2010

Tiger Airways Holdings Limited has posted strong growth in profitability for the quarter ended 31 December 2009.

Operating profit for the quarter ended 31 December 2009 was S$23.5 million, an operating profit margin of 17% on revenue of S$139.5 million. Net profit after tax for the quarter was S$14.1 million, a S$22 million turnaround compared to the 3rd quarter of the previous financial year.

The result was supported by revenue growth of 29% from S$107.8 million to S$139.5 million representing a 54% increase in passenger numbers.

The growth in passenger numbers was at a faster pace than the increase in seat capacity (+46%) pushing passenger load factor to 88%, a 5 percentage points improvement over the previous year. Unit cost as measured by Cost per Available Seat Kilometre (CASK), was 16% lower than the previous year, whilst CASK excluding fuel decreased by 4%.

Ancillary revenue increased from S$15.6 million to S$24.9 million for this quarter. The company stated that ancillary revenues currently account for ~20% of total revenues.

Lowest airfares

Tony Davis, president and Group CEO, said that the group delivered a strong financial result for the quarter, driven by traffic growth across “both our Cubs” (a term used to refer to its two operating airlines), increasing ancillary revenues and a focus on cost containment.

“The result demonstrates that we have the right model in the right markets. In fact, Tiger Airways Australia has been profitable for two successive quarters, proving that our Australian business has exited the start-up phase at a faster pace compared to the Singapore business, and is well positioned for growth going forward.”

“Our model is about providing passengers with the lowest airfares. What was most pleasing is that we achieved this profitable result with a 19% reduction in average passenger fares.”

According to Davis, the focus on cost containment has pushed controllable costs (i.e. costs excluding fuel) per seat down 17% year-on-year for the 9 months to 31 December 2009.

“By generating seats at the lowest cost, we can provide the lowest airfares on a sustainable basis, and consumers across the Asia Pacific region have certainly embraced our product,” said Davis.

Year-to-date (April – December 2009)

Revenue grew 19% from S$291.2 million to S$345.6 million on the back of a 51% increase in passenger numbers. Net profit improved to S$5.9 million from a net loss of S$32.9 million in the previous period.

Related Reads

comments powered by Disqus