Posted on: 13 October 2014 by Mark Howells
Tiger Airways Holdings (Tigerair) has agreed to sublease 12 of its aircraft to InterGlobe Aviation limited (IndiGo) in an attempt to reduce excess capacity, forming part of a broader turnaround strategy.
Although the aircraft will be subleased at a discounted rate in comparison with original lease rates, Tigerair hope that over the sublease periods – which are between three and four years – the group’s cashflow burden will be reduced by approximately $162 million.
The 12 aircraft in question were previously operated by Tigerair Philippines, which was divested in March, and Tigerair Mandala, which ceased operating in July. They will be delivered to IndiGo over six months beginning in October 2014.
Of the aircraft, 11 will be returned to Tigerair at the end of their sublease periods, after which time the group plans to re-introduce seven into the operating fleet, leaving room to bring the remaining four back into network service over the following two years.
The group plans to utilise a one off accounting provision for the 12 subleased aircraft of $93 million over the next six years, with a particular focus on Tigerair’s operations in Singapore. This follows the receipt of anti-trust immunity for the Tigerair–Scoot alliance in August.
The turnaround strategy has also seen Tigerair announce the cancellation of 9 aircraft ordered in 2007.