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Tiger Airways Ltd is replacing its chief executive officer with a Singapore Airlines Ltd’s board member, in a sign that its largest shareholder will wield greater influence at the troubled budget carrier.
Wednesday’s move comes less than a week after Tiger reported losses ballooned in its last financial year and as Singapore Airlines, which owns 40 percent of Tiger, pushes a strategy of expanding its exposure to the fast-growing Asia Pacific market and the low-cost segment.
“They’ll try to see where Tiger fits into all this and make better sense of what is happening and how different they can go forward in that particular segment,” said Sagar Ashok, an aerospace consultant at Frost & Sullivan.
Lee Lik Hsin, a 20-year veteran of Singapore Airlines, will become chief executive from May 12, Tiger said in a statement on Monday. He will replace Koay Peng Yen who joined Tiger from the shipping industry less than two years ago.
Tiger is one of two budget airlines within the Singapore Airlines group, which also has a medium-haul unit, SilkAir, and its namesake premium long-haul carrier service.
Unlike Scoot, its fully owned medium to long-haul budget airline, and SilkAir, Tiger has always operated as an independent entity.
“The group will align all these airlines so as to have a coherent strategy going forward. So each airline benefits from the other airline and they really don’t compete on routes, have flight schedules which go hand in hand with the other airlines and things like that,” said Ashok.
Unlike bigger rivals such as AirAsia Bhd and other low cost airlines including Qantas Airways Ltd-owned Jetstar and Garuda-owned Citilink, Tiger has scaled down its ventures in highly competitive markets to cut losses.
Under Koay, Tiger sold its loss making Philippine business and said last week that it was reviewing its investment in its Indonesian joint venture.
“During his tenure, the Tigerair Group endeavored to improve the fortunes of its overseas cubs, Tigerair Australia, Tigerair Philippines and Tigerair Mandala. However, turbulence in those markets hampered fledgling carriers from establishing a decisive hold,” Tiger said in a statement.
Last week, Tiger said its losses widened to S$223 million ($179 million) in the year ended March from S$45.4 million a year ago as it booked charges and accounted for losses from its operations in countries including Indonesia and Australia.
Just a year ago, Tiger had highlighted its growing operations at home and ventures in Indonesia and the Philippines when it raised nearly S$300 million to expand its business and strengthen its balance sheet.
(Editing by Edwina Gibbs)