Tiger Air shares fall on news of fundraising plan

Tiger Airways, the unprofitable low-fare carrier part-owned by Singapore Airlines, fell the most in more than four months yesterday after saying it is considering a fundraising plan to improve liquidity.

The stock dropped by as much as 8.5 per cent, the biggest intraday fall since January 24, and traded at 49 Singapore cents. The shares jumped 18 per cent on May 30.

Tiger Air is grounding planes, cancelling aircraft orders and is reviewing its investment in a venture in Indonesia after six consecutive quarters of losses led largest shareholder Singapore Air to name a new chief executive for the low-fare airline. The restructuring efforts are symptomatic of the challenges budget airlines face in Southeast Asia, where competition among half a dozen carriers has pushed down air fares.

The airline needs to "retreat from its failed international expansion which they seem to be doing and they obviously have too many planes," said Timothy Ross, Singapore-based transport analyst at Credit Suisse.

"I don't think they require an immediate funding assistance. Tiger benefits from the broader group. With SIA, you have scale behind you."

The company is in preliminary stages of discussions on its fundraising proposal, Tiger Air said in a statement to the Singapore stock exchange. The airline is "aware of rumours" of possible "corporate action" by Singapore Air, the carrier said, without elaborating. The statement was in response to a stock exchange query after the May 30 stock jump.