Tiger Airways Holdings Limited (“Tigerair” or the “Group”) has reported an operating loss of $2.3 million in the quarter ended 31 March 2015 (“4QFY15”), compared to an operating loss of $24.2 million recorded in the previous corresponding quarter. Stronger yield (+12.0%), higher load factor (3.9 percentage point increase) and lower fuel cost (-20.0%) contributed to the improved performance. The Group revised its aircraft depreciation policy following a review of its fleet plan. It also re-assessed the maintenance provisions for leased aircraft. Stripping out these two non-cash adjustments, the Group would have recorded an operating profit of $4.0 million.

The Group’s net loss after tax significantly narrowed to $18.8 million, compared to a loss after tax of $95.5 million for the previous corresponding period.

Non-operating items included the re-assessment of prior years’ maintenance provisions for leased aircraft, which led to a one-time charge of $10.8 million. The Group made a decision to dispose of two owned aircraft by end of FY16, and recorded a $17.5 million loss when these were re-classified as aircraft held for sale. Having re-assessed its fleet requirements, the Group also increased its provision for surplus aircraft by $9.3m, on top of the 2QFY15 provision of $99.3m.

Conversely, the Group recorded a reversal of $20.1 million provision for potential loss from the sale of two new A320ceo aircraft deliveries, transferred from Tigerair Australia to the Group, following the divestment of Tigerair Australia. In April 2015, Tigerair finalized an agreement with Airbus to exercise two purchase options for the A320neo, previously granted under the A320neo aircraft order in March 2014, with a corresponding cancellation of the two A320ceos transferred from Tigerair Australia. The Group’s A320neo order is now for 39 firm aircraft, with 11 purchase options.

Mr Lee Lik Hsin, CEO of Tigerair, said, “Our turnaround efforts continue to bear fruit. More than half of the recovery in operating performance came from stronger yields and load factors, while the remainder came from lower fuel price. The changes in provisions relating to our fleet will also put us on a firmer footing moving forward.”

For the full year ended 31 March 2015, operating loss narrowed to $39.9 million compared to an operating loss of $52.0 million a year ago. Group loss after tax was $264.2 million, compared to the previous year’s loss after tax of $223.0 million.

Outlook

There continues to be surplus capacity in the industry which would have downward pressure on yields. Nonetheless, the Group expects to continue making headway in its turnaround effort, by optimizing fleet size and improving yields and loads.

The Group will also benefit progressively from lower oil prices, as the proportion of older fuel hedging contracts undertaken before the fall in price decreases.

Tigerair will continue to engage in greater collaboration with Scoot and SIA, and benefit from the increased connectivity and market access that the SIA Group helps to bring.