Tiger Airways to sell or shut Indonesia affiliate if no sign of turnaround: Sources

Singapore's Tiger Airways aims to sell or close its Indonesian joint venture unless there are signs of it turning around this year, people familiar with the matter said. -- ST FILE PHOTO: JOYCE FANG 
Singapore's Tiger Airways aims to sell or close its Indonesian joint venture unless there are signs of it turning around this year, people familiar with the matter said. -- ST FILE PHOTO: JOYCE FANG 

SINGAPORE (REUTERS) - Singapore's Tiger Airways aims to sell or close its Indonesian joint venture unless there are signs of it turning around this year, people familiar with the matter said.

PT Mandala Airlines resumed flights in 2012 after financial restructuring under which Tiger bought a one-third stake, raised to 35.8 per cent in September. Even so, Tiger lost nearly $40 million in the venture in April to December.

Tiger and Indonesian private equity firm Saratoga, which owns 51 per cent of the venture, are now unwilling to make further investment, said the people, who were not authorised to speak publicly on the matter and so declined to be identified.

"The writing is on the wall," said one company source.

Last month, the venture now known as Tigerair Mandala suspended nine routes or about 40 per cent of its capacity in a market where larger competitors such as Lion Air and Garuda Indonesia are adding planes to more destinations in the 17,000-island archipelago.

"The more it flies, the more it loses money as nearly every route is below break-even," said one of the people, referring to Tigerair Mandala. "Tiger is subscale in Indonesia. Either it gets out or grows out of trouble."

A spokesman for Tigerair Mandala said both Tiger and Saratoga are committed to supporting the company "for a long period to ensure business sustainability."

Tiger Airways, about 40 per cent owned by Singapore Airlines, did not respond to queries from Reuters.

Tiger would be facing its second exit this year if it sells or closes Tigerair Mandala, after agreeing in January to sell its loss-incurring Philippine business to Cebu Air Inc parent Cebu Pacific.

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