Roaring Tiger IPO marks aviation return to financial favour

Roaring Tiger IPO marks aviation return to financial favour

Low-cost carrier Tiger Airways has made a strong debut on the Singapore stock market, signalling a return to financial favour of the aviation sector.

The Singapore-based airline raised S$248m (US$177m) in the first initial public offering by an Asian airline for five years. Shares rose 5.3 per cent to S$1.58, compared with its offer price of S$1.50.

The launch attracted strong interest from both institutional investors and the general public, despite initial fears that forecasts were over ambitious during a recessionary period.

However low-cost travel is a rapidly burgeoning market in south-east Asia. In Singapore’s Changi Airport, low-cost carriers account for about a fifth of passenger traffic, up from just 3 per cent in 2004.

Tiger is aiming to expand in south-east Asia and Australia. The carrier will use the bulk of the IPO proceeds before expenses to help finance the acquisition of up to 51 new Airbus A320 aircraft by 2015, adding to its fleet of 17 aircraft.

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Changi, Asia’s fifth-largest airport, hit a monthly record for passenger numbers in December, pointing to a sustained recovery in air travel in the region. The group said it handled 3.83m passengers, a 9.7 per cent rise from a year earlier.

But the airline is also facing increasing competition from Malaysia’s AirAsia and Jetstar, owned by Qantas – which announced a co-operation agreement shortly before the listing.

Tiger, which began its first commercial flights in September 2004, flies from Singapore to destinations across Asia, including popular holiday spots such as Penang in Malaysia, and Bangkok and Phuket in Thailand.

It has also expanded into Australia where it offers domestic flights between key cities and towns across the continent.

The carrier is 33.1 percent owned by flag carrier Singapore Airlines.