Broker's Take: Tigerair making progress but no turnaround yet

OCBC Investment Research on Wednesday said Tiger Airways narrowed its fourth-quarter FY2015 net loss by 80.3 per cent year on year to S$18.8 million on the back of a 5 per cent growth in revenue to S$172.2 million, driven by better yields and load factor.

But it said as the airline continues its restructuring efforts, Q4 FY2015 continued to see one-off charges, as it also made changes to its accounting policies.

"For FY2015, Tigerair's net loss grew 18.5 per cent to S$264.2 million resulting from the many one-off charges recorded throughout the year. With the airline industry expected to remain challenging on overcapacity in the region, we think the improved fuel hedging positions will benefit Tigerair over the next two years."

While the effort to collaborate with Singapore Airlines is making progress, OCBC Investment Research said it thinks Tigerair's turnaround still has some way to go with slow recovery expected over the next two years.

"We reiterate our SELL rating but increase our fair value marginally from S$0.29 to S$0.30 on cheaper jet fuel assumptions," it said.