Singapore: Tiger Airways Holdings Ltd. agreed to buy a 33 per cent stake in PT Mandala Airlines to expand in Indonesia as it challenges AirAsia Bhd for Southeast Asian budget travellers.
Mandala, which is undergoing a financial restructuring, plans to adopt a low-cost business model, Singapore-based Tiger said in a statement yesterday. It didn't say how much it would pay for the stake in the carrier, which will be majority owned by the Saratoga Group. Separately, Tiger reported a 94 per cent drop in fourth-quarter profit after tax provisions.
Tiger will also boost capacity at its main Singapore hub by at least 40 per cent in six months started April 1, as it follows AirAsia in adding planes and bases to take advantage of rising travel demand in Southeast Asia. The carrier will keep capacity at its Australia arm unchanged as competition from Qantas Airways Ltd.'s Jetstar and Virgin Australia damps fares.
Tiger, part-owned by Singapore Airlines Ltd., also this year agreed to a tie-up with South East Asian Airlines to add flights in the Philippines. The Philippines aviation regulator today made a provisional order blocking this arrangement on concerns it broke cross-border flight rules.
Net income dropped to S$1.3 million (Dh3.85 million) in the three months ended March 31 from S$22.3 million a year earlier following tax provisions linked to its Australian unit, Tiger said. Operating profit dropped to S$10.2 million from S$11.8 million on higher fuel costs. Sales increased 16 per cent to S$163.2 million.
Tiger rose 0.7 per cent to close at S$1.55 in Singapore before the announcements.
