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Singapore's Tiger Airways has agreed to sublease 12 surplus aircraft to Indian budget airline IndiGo as part of a plan to cut capacity and trim costs in the face of stiff competition in Southeast Asia.
In a statement late on Thursday, loss-making Tiger, which is 40 per cent-owned by Singapore Airlines, said it would make a one-off accounting provision of about S$93 million related to the aircraft.
Tiger said it was also considering various funding options, including the possibility of a rights issue. "Given the current over capacity situation in the industry, the 12 aircraft will be subleased at a discount to their original lease rates," the airline said. "However, compared to the idling of these 12 aircraft, this sublease agreement will significantly reduce the group's cash flow burden by about S$162 million over the sublease periods."
Most of these planes were previously operated by Tiger's lossmaking Philippines and Indonesian ventures and were returned to the group after Tiger sold its Philippines business to Cebu Pacific and shut its Indonesian operations.