Philippine carrier Cebu Pacific is to buy the Filipino unit of Singapore-based budget carrier Tigerair in a deal that will also create a strategic alliance, the airlines announced Wednesday.
Cebu Pacific said it would pay US$15 million to wholly own Tigerair Philippines, a small carrier that is 40 percent controlled by Tigerair, and expects the transaction to close in a few months.
The amount also includes payment for the 60 percent share of Tigerair Philippines owned by Filipino investors.
The carrier was previously known as Southeast Asian Airlines but was renamed after the Singapore carrier bought into it in mid-2012.
Group chief executive Koay Peng Yen told a teleconference Tigerair had accumulated a loss of 84 million Singapore dollars (US$66.12 million)on its Philippine investment as of September 30 last year.
As part of the agreement announced in Manila and Singapore on Wednesday, Cebu Pacific and Tigerair will jointly operate routes between Singapore and the Philippines.
The websites of both Tigerair and Cebu Pacific will be used to market all routes operated by both airlines.
Cebu Pacific president and chief executive Lance Gokongwei said that "as the relation grows" the two airlines could consider further cooperation such as shared ground-handling operations.
"We're very excited and eager to start our cooperation agreement with Tigerair," Gokongwei told the teleconference.
"Tigerair and Cebu Pacific share a vision for both airlines to join forces and compete more effectively in the regional market," Koay said in a joint statement.
"We also look forward to achieving greater cost savings from the coordinated operations while providing more travel options and greater convenience for our customers."
The joint statement said the alliance would allow Cebu Pacific to target high-growth markets including Australia and India, while Tigerair would be able to fly more passengers to other cities in Cebu Pacific's network in the Philippines and North Asia.
Cebu Pacific said it operates an average of 2,200 flights per week with 48 aircraft to 24 international and 33 Philippine cities.
The Tigerair group, which also includes Tigerair Singapore, Tigerair Mandala and Tigerair Australia, said it flies to more than 50 destinations across 13 Asia-Pacific countries using 51 aircraft.
Instead of folding it into Cebu Pacific, Gokongwei said Tigerair Philippines would operate as a distinct entity for the time being, retaining its existing managers and brand name.
It now operates an average of 118 flights per week with five aircraft to 11 domestic and international destinations from Manila and Clark airports.