Tiger Airways Holdings fell by a record in Singapore trading as Australia’s air safety regulator said it may keep the carrier grounded beyond this week because of safety concerns.
Tiger dropped as much as 16%, the most since the shares were listed in January 2010, and traded down 8.8% at $1.085 as of 9:14 a.m. in the city. Australia’s Civil Aviation Safety Authority, which grounded the Singapore-based airline on July 1, will decide on applying to the Federal Court to extend the decision beyond July 9 after meeting with Tiger management, Peter Gibson, a spokesman for the safety agency, said in a telephone interview yesterday.
Tiger dropped as much as 16%, the most since the shares were listed in January 2010, and traded down 8.8% at $1.085 as of 9:14 a.m. in the city. Australia’s Civil Aviation Safety Authority, which grounded the Singapore-based airline on July 1, will decide on applying to the Federal Court to extend the decision beyond July 9 after meeting with Tiger management, Peter Gibson, a spokesman for the safety agency, said in a telephone interview yesterday.
Chief Executive Officer Tony Davis is leading Tiger’s efforts to get the carrier’s Australian fleet back in the air after the bureau halted its flights citing a “serious and imminent risk to air safety.” Qantas Airways and Virgin Blue Holdings, the nation’s biggest airlines, gained in Sydney trading on speculation the grounding may enable them to raise fares.
“We continue to question the longevity of Tiger in Australia,” Anthony Moulder, an analyst at Credit Suisse Group AG in Sydney, said in a note to clients today. “Tiger’s pricing has been disruptive to the wider leisure market, and therefore we expect a less disruptive pricing environment is positive for all competitors.”
Qantas rose 5.2% to A$1.945 at 10:46 a.m. in Sydney, paring this year’s decline to 23%. Virgin Blue, the holding company for Virgin Australia, rose 7% to 30.5 Australian cents.
SINGAPORE AIRLINES
Tiger Airways is 33% owned by Singapore Airlines, according to data compiled by Bloomberg. The suspension of Australian services is costing the carrier $2 million a week, it said in an e-mailed statement today.
“Safety has been and will continue to be of paramount importance,” Tiger said in the statement. “Tiger Airways Singapore services are not affected and continue to operate normally.”
The Australian safety agency has been monitoring the airline this year and earlier imposed conditions, including improving pilot proficiency and maintenance control, the Australian air safety regulator said in a separate statement. To extend Tiger’s grounding, the agency would need to make an application by July 8, said Gibson, its spokesman.
“There’s a process that we’re working our way through,” Gibson said.
ASH CLOUD
The grounding affects 35,000 passengers, according to Transport Minister Anthony Albanese. It is a further disruption for Australian travelers who have grappled with flight cancellations since the Puyehue-Cordon Caulle volcanic complex in Southern Chile erupted June 4, sending an ash cloud billowing around the globe.
Tiger began domestic Australian flights in November 2007 and has kept costs and fares down since entering the market through steps including charging extra for food, airport check- in and reserved seating.
With a fleet of 10 Airbus SAS A320 planes in Australia, it’s the smallest of three airline groups flying domestic routes. Virgin Australia operates 86 aircraft while Qantas, Australia’s largest airline, and its budget carrier Jetstar had 252 planes and about 5,600 domestic flights a week as of September, their websites show.
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