Prior to his retirement, Chan Kit Whye (left) worked more than 30 years as Regional Finance Director, Financial Controller and Manager in a multinational specialty chemical business. He has played an active role in CPA (Australia) Singapore Branch, taking up positions in its Continuing Professional Development and Social Committees. Kit Whye is a Fellow of CPA Australia, CA of Institute of Singapore Chartered Accountants and CA of the Malaysian Institute of Accountants. He holds a BBus(Transport) Degree from RMIT, MAcc Degree from Charles Sturt University and MBA from Durham Business School.Tiger Air made an announcement of good news and bad news.
Good news is that it will sublease its 12 unused aircraft to InterGlobe Aviation Limited (IndiGo) for between 3 and 4 years, which will improve its cash flow by about $45 million a year.
Bad news is that the company will take a $93 million one-off provision relating to these aircraft.
Another piece of bad news is that the company is "reviewing various funding options (including the possibility of a rights issue) to proactively strengthen its balance sheet and meet its general corporate funding requirements."
Overall, my view for this stock is still very bearish and negative... but how low can this share go?
Given the current overcapacity situation in the industry, TigerAir will sublease 12 aircraft to IndiGo at a discount to their original lease rates. However, compared to the idling of these 12 aircraft, this sublease agreement will significantly reduce the Group’s cash flow burden by about $162 million over the sublease periods. NextInsight file photo|
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