Tiger Airway’s Aussie grounding could only cost $23m

DMG negates UOB’s earlier loss projection of $35m-$60m for Tiger Airways as a result of the fiasco saying that with the top management now occupied by Singapore Airlines’ former boss, it would only be just a matter of time before we see confidence coming back for the budget carrier.

Even if SIA denies it, former SilKAir CEO Chin Yau Seng’s assumption of Tony Davis’ responsibilities as the Group President and CEO of Tiger is seen by some analysts as a move for the Singapore’s flag carrier to protect its 30% share to the troubled airline. SilKAir is a wholly owned subsidiary of SIA.

“It won’t be a quick rebound. Of course, Tiger struggles from passengers’ loss of confidence since the grounding was due to safety issues. It’s a serious matter but with SIA coming into play, we believe that it will help boost confidence,” DMG analyst Melissa Yeap said in an interview.

UOB’s loss projection of $35-$60m loss was made when the market was still speculating on whether the Civil Aviation Safety Authority of Australia (CASA) will apply for a court order to extend Tiger’s ban on July 9 for up to 40 days. On July 7, the aviation industry regulator announced extension of Tiger until the end of the month.

Ms. Yeap however doesn’t believe that suspension will be extended further even as Australian court hearing over the grounding of Tiger Airways’ fleet has been moved from July 22 to 28.

“I don’t think that suspension of Tiger will extend beyond August 1,” she said but refused to elaborate further.

Tiger Airways believes that the cost impact of the suspension is estimated to be S$2 million per week.

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