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SQ bails out TR (as expected)

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  • SQ bails out TR (as expected)

    Summary of key developments in TR announced this morning:

    - SQ will exercise its convertibles in TR and increase its stake to 55% from 40%.

    - TR will raise new equity via rights of S$234m. SQ has committed to subscribe its share and a little more if the minorities undersubscribe. Total SQ commitment is S$140m.

    - TR will sell its remaining 40% stake in Tigerair Australia to Virgin Australia for A$1. Loss from this transaction is ~S$60m.

    - TR is subleasing 12 excess A320s to Indigo over ~4 years. TR will provision S$99m for the difference of the leases it will receive vs pay over the lease period.

    Effectively, this allows TR to start afresh with a more sensible fleet size. Next year will also see TR increasing its coordination of schedule with TZ. Looks like the worst is over for TR (at ridiculous losses) but they're not really out of the woods.

  • #2
    Yes SIA will raise its stake in Tiger to 55% from current 40%. Tiger reported a 2nd quarter loss of $182 million - and if add up all its quarter losses - it will come up to over $300 million for 2014, excluding its previous years losses.
    Believed its better for SIA to merged its 2 low costs subsidiaries ie Scoot and Tiger into one as it will have tremendous costs savings in shared resources - from flight ops, to crew training. As Scoot too is making losses - its imperative that SIA cuts down on their losses and get as much joint efficiencies from consolidating these 2 airlines. And it will make it very seamless in transferring passengers from Scoot to Tiger and vice versa - as now it is technically 2 different low cost airlines.

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    • #3
      And SIA will further owned up to 71% of Tiger by early next year.

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      • #4
        Originally posted by flyguy View Post
        And SIA will further owned up to 71% of Tiger by early next year.
        Just to clarify, TR plans to issue new shares to existing shareholders in a rights issue. If all minority shareholders subscribe to their share of the rights, SQ's shareholding will not change from the current 55%. The 71% is the theoretical upper limit of SQ's shareholding post rights if all minority shareholders waive their entitlements, and SQ subscribes to its entitlement, plus more within its stated limit of S$140m.

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        • #5
          sigh.... throwing away good money again...
          one bad investment after another yet again... Ansett, Air NZ, Virgin Atlantic, Tiger Australia, Tiger Phil, Tiger Mandala, Scoot, Tiger Taiwan, NokScoot, Vistara,... what else?
          Only one success story... Tradewinds/Silkair

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          • #6
            On what grounds are you saying Scoot and Vistara are bad investments. Scoot hasn't made money yet but that is expected. Vistara hasn't even started operations?

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            • #7
              Even Silkair profits have been very thin - something like less than $5 million for last year. Scoot unlikely to make a profit till at least 5 years or more down the road or longer as now they have heavy financing to pay for their new 787s due next year onwards. Similiarly for Vistara too as unlikely to make profit within the first few years for a start-up.

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