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22 April 2024

Tiger Airways to raise S$273m from Singapore IPO

By Reuters

Singapore's Tiger Airways plans to raise up to S$273 million (Dh718.2m) in an IPO this month, braving a still struggling air market in the first listing of an Asian airline in almost five years.

Tiger's IPO, downsized from an earlier estimated figure of around $300m-350m, comes amid concerns about the health of the global airline industry, which has been battered by falling travel and cargo demand, and a rally in fuel prices.

There are also fears that Tiger and other Asian budget carriers may have ordered too many planes, and that an industry shakeout is inevitable.

Alex Glock, Embraer's Managing Director for Asia Pacific, said low-cost carriers had an order backlog of 521 aircraft between now and 2014 and would need demand to grow by 14 per cent a year to sustain the additional capacity.

"(Low cost carriers) will be pressured to drop prices in order to attract passengers to fill the additional seats that are coming from the backlog, which can be especially painful if confronted with a potential increase in future oil prices," he said.

Tiger, whose owners include Singapore Airlines and state investor Temasek, is selling around 165 million shares, or about 30 per cent of its enlarged share capital, according to a term sheet seen by Reuters.

The money raised will fund aircraft purchases, be used to set up a new operating base for Tiger as well as pay off some existing debt, the term sheet said.

The tough environment for airlines has pushed some traditional carriers including Japan Airlines to the brink of bankruptcy, and even low-cost carriers like Tiger have been affected.


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