SINGAPORE - Singapore Airlines (SIA) will take majority control of Tigerair as part of the budget carrier's turnaround plan.
The decision for SIA to increase its stakeholding from the current 40 per cent to 55 per cent was announced on Friday morning as Tigerair reported a loss of $182.4 million for the three months to the end of September.
This reversed a $23.8 million profit a year ago.
SIA's stake could increase further by January next year after Tigerair completes a rights issue to raise up to $234 million to strengthen its balance sheet.
This will be done by giving existing shareholders an opportunity to take up more stock at a discounted price of 20 cents per share, a 39 per cent discount on the one-day volume weighted average price of 33 cents on Oct 16.
SIA has agreed to take up its entitlement and also subscribe for excess rights shares, up to a total of $140 million.
Tigerair, which has been unable to withstand the onslaught of cut-throat competition from agressive rivals like AirAsia and Lion Air, also announced plans to sell its 40 per cent stake in Tigerair Australia to Virgin Australia for AUD$1.
The branding and website distribution and sales arrangements will continue, in return for which Tigerair will obtain franchise revenues.
The Singapore low-cost carrier group had recently divested its stakes in subsidiaries in Indonesia and the Philippines and announced plans to lease existing aircraft to other airlines.
Tigerair's group chief executive officer, Lee Lik Hsin, said: "We resolved our excess capacity issues through the sublease arrangements made for the surplus aircraft, and we also stemmed further losses from our overseas venture.
"We are heartened by SIA's support in this rights issue. We are already working closely with Scoot, and look forward to further collaboration with the rest of the SIA Group."
Scoot is SIA's wholly-owned long-haul budget carrier.