ACCC Clears Tiger – Virgin Tie-Up

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From left to right, are Campbell Wilson (CEO of Scoot), Koay Peng Yen (Tiger Airways' Group CEO) and Stewart Adams (Tiger Airways Singapore Managing Director).

From left to right, are Campbell Wilson (CEO of Scoot), Koay Peng Yen (Tiger Airways’ Group CEO) and Stewart Adams (Tiger Airways Singapore Managing Director).

Tiger Airways Holdings Limited (here after referred to as “Tiger” or the “Group”) has finally received the all-clear sign from Australian ACCC for selling off 60% of their stake in Tiger Airways Australia Pty Ltd (“Tiger Australia”) to Virgin Australia.

Koay Peng Yen, Group CEO of Tiger Airways while speaking on the occasion mentioned that the group is delighted to have finally received the go-ahead from ACCC. With this roadblock now out of the way, they can bring the focus on to discussing with Virgin Australia about how Tiger Australia can expand its network within the country and effectively compete with the other major players in the budget airlines segment. It is expected that the transactions will be completed by the second part of 2013.

It is believed in the Tiger ranks that the join venture will form a stronger Tiger Australia, allowing them to make use of the joint shareholders in network planning, procurement of resources and operational management, employing a low cost Internet model for distribution. Needless to say with this conjoint shareholder strength the network will be in a better position to tap into available resources, expanding further into Australia and growing its fleet of aircrafts.

A Tiger Airways Flight

A Tiger Airways Flight

Together Tiger Airways and Virgin Australia have committed to pour in an additional A$62.5 million into the joint venture heralding the growth of Tiger Australia in the country. Additionally the two airlines have a plan to increase the fleet size of Tiger Australia to 23 by March 31, 2018; with an additional potential to increase the fleet size to 35 later. It is pertinent to mention here that Tiger Australia will be a separate organization, with its own board and management team at the helm of affairs.

As regards investor related information; based on the financial position of the company, Tiger Airways will be making a pro forma gain of $120 million out of the disposal of the stake. Pro forma total equity as at 30th September 2012 will jump by $128 million to $344 million, while pro forma NTA will increase by 60% to reach 41.8 Singapore cents per share. The additional cash flow will be beneficial for the Group and it will be inflated by $35 million.

Tiger Australia will be paying Tiger Airways an annual license fee for the use of the name Tiger, applicable for the next 20 years and calculated as a fixed percentage of the annual total gross revenue. They will also have the option to renew the licensing agreement for two additional periods of five years each. Tiger Australia will additionally make a payment of A$5 million to Tiger Airways if it is successful in meeting some financial achievements in the next five years.

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Rory Mukherjee

Rory Mukherjee is a freelance article writer specialising in digital photography and travel related topics.He is also an avid traveller who loves to document his travels in his articles and through his lenses.Rory currently contributes the latest travel news to YouTravel.com.au and hope to expand his travel prowess in the not too distant future.