TIGER AIRWAYS, the Singapore-based low-cost carrier part-owned by the family of the late Tony Ryan, has valued its initial public offering (IPO) at the maximum price of 1.65 Singapore dollars (€0.83) per share.
It will float on the stock exchange in Singapore on January 22nd.
This will raise 246.8 million Singapore dollars for the Asian airline. It plans to use 166 million Singapore dollars to buy aircraft, another 10 million Singapore dollars to fund “potential new airlines or operating bases” and 50.4 million Singapore dollars to pay down short-term loans.
The Ryan family owns 16 per cent of Tiger Airways. The shares are held by Ryanasia, an Irish nominee company controlled by Declan Ryan, a son of Tony Ryan, the Ryanair founder.
Tiger’s business model is based on Ryanair’s.
Tiger’s IPO prospectus states that Ryanasia might sell some of its shares in the company.
Tiger ensured widespread coverage of the IPO in Singapore, where it is the first low-cost carrier to list on the stock market, by launching special air fares of 1.65 Singapore dollars to a variety of destinations.
Tiger chief executive Tony Davis has said the low-fare, low-cost model is underdeveloped in most southeast Asian countries and presents opportunities for future growth.
Tiger’s plans to float have received a lukewarm reaction from aviation analysts.
The airline has never made a profit and it was forced to price the IPO at about half the level it originally flagged.
Analysts have also questioned whether the IPO will yield sufficient funds for a meaningful expansion through the purchase of new aircraft. Tiger needs 750 million Singapore dollars to fund the delivery of aircraft on order.
Questions have also been raised over its ability to compete in the Australian domestic market, where it competes with rival low-cost operators Qantas/Jetstar, which is led by Irishman Alan Joyce, and Virgin Blue, which was established by Richard Branson.
Tiger was established in Singapore in 2004 and began flying in Australia three years later.
It carried 2.2 million passengers in the six months to the end of 2009, an increase of 49 per cent on the same period the previous year.
