Tiger Airways Holdings Pte, the budget carrier part-owned by Singapore Airlines Ltd., may raise about S$200 million ($143 million) in an initial public offering, according to a pre-marketing document.
Tiger may lodge offer filings with the Singapore stock exchange as early as Dec. 21, according to two people familiar with the situation. Citigroup Inc., Morgan Stanley and DBS Group Holdings Ltd. have been mandated to manage the sale, they said, asking not to be identified as the information isn’t public.
The low-fare airline is expected to base its share sale on financial forecasts that include posting net income of S$61 million in the year ending March 2011 and then of S$79 million the year after, according to the document. The timing of the IPO is “better” now with air travel beginning to pick up after the global recession plunged airlines globally into losses, said Rohan Suppiah, an analyst at Kim Eng Securities Pte.
“The broader market is picking up, we’re seeing higher loads, and air travel is starting to improve,” Suppiah said.
Tiger Air has yet to make any decision on an IPO, spokesman Charles Sng said in an e-mailed statement. It is an option that shareholders may consider, he said.
Nick Footitt, a spokesman for Morgan Stanley, and James Griffiths, a Citigroup spokesman, declined to comment. Karen Ngui, a DBS spokeswoman, was unavailable. Singapore Air spokesman Nicholas Ionides referred inquiries to Tiger Air.
The carrier aims to price the shares in mid-January and plans for a listing in February, one of the people said. The initial share sale will value Tiger, which began flying in September 2004, at between S$725 million and S$910 million, according to the document.
AirAsia Bhd., the only discount carrier in Southeast Asia that’s publicly traded, is valued at 3.64 billion ringgit ($1.1 billion), according to data compiled by Bloomberg. The Sepang, Malaysia-based airline, Southeast Asia’s biggest low-fare airline, raised 505.4 million ringgit in September in a private placement of shares aimed at cutting debt.
Airlines globally may post $11 billion of losses this year, according to the International Air Transport Association. The losses may shrink by half to about $5.6 billion next year, the group said yesterday. Passenger demand, after a decline of 4.1 percent in 2009, may grow by 4.5 percent in 2010 as the industry rebounds from the recession, IATA said.
The Tiger group had accumulated losses of S$127 million and negative equity of S$107 million by the end of Sept. 30, 2009, according to the document.
Tiger, Jetstar Asia and other discount carriers have doubled their market share in Asia since 2005 by winning passengers from flag carriers. At least 20 low-fare airlines have started in the continent since 2000.
Singapore Air, the world’s second-largest airline by market value, owns 49 percent of Tiger. Temasek Holdings Pte, a Singapore government-owned investment company, owns 11 percent.
Tiger has 17 aircraft in operation and another 14 to 17 to be delivered over the next two to three years, according to the pre-marketing document. The average age of its fleet was about 2.2 years in October, it said.
The carrier has placed orders for a total of 66 Airbus SAS aircraft, according to the planemaker’s Web site. The airline flies to more than 25 destinations across nine countries in Asia and Australia, according to its Web site.