08-05-2014, 09:03 AM
http://www.todayonline.com/business/tige...epage=true
Tigerair CEO resigns amid carrier’s financial woes
BY
WONG WEI HAN
PUBLISHED: MAY 8, 4:14 AM(PAGE 1 OF 1) - PAGINATE
SINGAPORE — Tigerair announced yesterday the resignation of chief executive Koay Peng Yen, who will be replaced by Singapore Airlines executive Lee Lik Hsin, signalling its largest shareholder’s intention to step up its influence at the budget carrier.
The move, effective next Monday, comes barely two years after former shipping industry executive Koay joined Tigerair in August 2012, and follows a string of poor performances overseas that has forced Tigerair to sell its Philippines unit and downsize its Australian presence.
Analysts TODAY spoke to were not surprised by the announcement, given Tigerair’s inability to stay profitable and grow regionally.
“The announcement was not a surprise and I would imagine Mr Koay was pressured a little in this development,” said Mr Brendan Sobie, chief analyst at industry research firm Centre for Aviation.
“Obviously, Tigerair hasn’t done very well and SIA is keen to extend its involvement over a brand that’s an important for its overall strategies. Tigerair is still independent, even with an SIA-backed chief executive. But there are things you can achieve with having someone at the top — at least SIA can be confident that what Tigerair does is in line with its overall ambition,” he added.
Mr Koay’s sudden departure comes days after Tigerair warned of a bleak outlook as it reported net loss for the financial year ended March had jumped nearly five times to S$223 million from S$45.4 million a year ago.
The carrier has found it especially difficult to sustain a profitable overseas presence: It has over the past year sold 60 per cent of its Australian unit and withdrawn entirely from Tigerair Philippines.
In a statement yesterday, Mr Koay described his tenure there as engineering a turnaround for the battered company. “Turning around a company is a process and not an overnight activity. Having laid the groundwork for the turnaround of Tigerair, it is now an appropriate time for me to hand over the reins,” he said.
Analysts say one of Tigerair’s problems was that it had expanded too rapidly into new territories, stretching its financial resources.
“Add to that the intensifying competitive environment in South-east Asia — that’s why few low-cost carriers have actually been able to make money outside their home markets,” Credit Suisse transport research analyst Timothy Ross said.
“But were Mr Koay to be held accountable, it’d be unfair given that many of the ills that Tigerair is facing are resulted from legacy decisions made before his appointment,” Mr Ross said. “It was notable that he reacted to the operating environment by shutting down loss-making businesses, while guiding Tigerair to secure a partnership with Scoot.”
Capitalising on the Tigerair-Scoot tie-up, in which both parties are seeking to further align their commercial activities, will be one of the priorities for incoming CEO Lee, said Mr Sobie.
“Tigerair currently has too much capacity in Singapore, where it’s starting to lose money again. They have to resolve that by working more closely with Scoot to push more transfer traffic, which can happen quite soon, pending the Competition Commission Singapore’s approval for the tie-up,” he added. “He might also have to make a decision on Indonesia’s Tigerair Mandala — whether to reduce shareholding or to maintain focus on that market with the help of SIA’s resources,” he said.
Tigerair CEO resigns amid carrier’s financial woes
BY
WONG WEI HAN
PUBLISHED: MAY 8, 4:14 AM(PAGE 1 OF 1) - PAGINATE
SINGAPORE — Tigerair announced yesterday the resignation of chief executive Koay Peng Yen, who will be replaced by Singapore Airlines executive Lee Lik Hsin, signalling its largest shareholder’s intention to step up its influence at the budget carrier.
The move, effective next Monday, comes barely two years after former shipping industry executive Koay joined Tigerair in August 2012, and follows a string of poor performances overseas that has forced Tigerair to sell its Philippines unit and downsize its Australian presence.
Analysts TODAY spoke to were not surprised by the announcement, given Tigerair’s inability to stay profitable and grow regionally.
“The announcement was not a surprise and I would imagine Mr Koay was pressured a little in this development,” said Mr Brendan Sobie, chief analyst at industry research firm Centre for Aviation.
“Obviously, Tigerair hasn’t done very well and SIA is keen to extend its involvement over a brand that’s an important for its overall strategies. Tigerair is still independent, even with an SIA-backed chief executive. But there are things you can achieve with having someone at the top — at least SIA can be confident that what Tigerair does is in line with its overall ambition,” he added.
Mr Koay’s sudden departure comes days after Tigerair warned of a bleak outlook as it reported net loss for the financial year ended March had jumped nearly five times to S$223 million from S$45.4 million a year ago.
The carrier has found it especially difficult to sustain a profitable overseas presence: It has over the past year sold 60 per cent of its Australian unit and withdrawn entirely from Tigerair Philippines.
In a statement yesterday, Mr Koay described his tenure there as engineering a turnaround for the battered company. “Turning around a company is a process and not an overnight activity. Having laid the groundwork for the turnaround of Tigerair, it is now an appropriate time for me to hand over the reins,” he said.
Analysts say one of Tigerair’s problems was that it had expanded too rapidly into new territories, stretching its financial resources.
“Add to that the intensifying competitive environment in South-east Asia — that’s why few low-cost carriers have actually been able to make money outside their home markets,” Credit Suisse transport research analyst Timothy Ross said.
“But were Mr Koay to be held accountable, it’d be unfair given that many of the ills that Tigerair is facing are resulted from legacy decisions made before his appointment,” Mr Ross said. “It was notable that he reacted to the operating environment by shutting down loss-making businesses, while guiding Tigerair to secure a partnership with Scoot.”
Capitalising on the Tigerair-Scoot tie-up, in which both parties are seeking to further align their commercial activities, will be one of the priorities for incoming CEO Lee, said Mr Sobie.
“Tigerair currently has too much capacity in Singapore, where it’s starting to lose money again. They have to resolve that by working more closely with Scoot to push more transfer traffic, which can happen quite soon, pending the Competition Commission Singapore’s approval for the tie-up,” he added. “He might also have to make a decision on Indonesia’s Tigerair Mandala — whether to reduce shareholding or to maintain focus on that market with the help of SIA’s resources,” he said.