LOW-COST carrier Tiger Airways celebrated the launch of its much-anticipated initial public offering yesterday by giving away air tickets for next to nothing.
The airline, which aims to raise $246.8million when its IPO takes off later this month, is offering 165.2 million shares - 30.6 per cent of the company - at $1.65 apiece with trading expected to start on Jan 22.
To commemorate the share sale, Tiger has released 16,500 one-way seats to some destinations including Kuala Lumpur, Langkawi and Phuket for $1.65 each, including taxes.
Bookings are now open for travel between July and October.
The airline, the first low-cost carrier which will be listed on the Singapore Exchange, will use the bulk of the cash raised to buy new planes in order to fuel its ambitious growth plans.
Tiger operates 17 Airbus 320 aircraft to 33 destinations but aims to boost its fleet size to 68 planes by the end of 2015.
About $50 million of the proceeds will be used to repay all outstanding short-term loans used to finance the group's aircraft pre-delivery payments so far.
The firm, which owns the carriers here and in Australia, has been hit by a welter of negative media coverage since it confirmed last month that it was seeking a Singapore Exchange listing.
Much of the criticism has come out of Australia, where rival Jetstar is based.
Tiger president and chief executive officer Tony Davis went on the attack in a teleconference yesterday, labelling some of the reports as 'factually incorrect'.
He dismissed claims that Tiger had downsized its IPO offering due to weak market interest.
'The offer we are making now is what the company had always proposed from the start,' he said.
The airline has been battling headwinds in the aviation market over the past two years.
It racked up losses of more than $50million in the 12 months to March 31 last year and reported a further net loss of $8.3 million in the six months to the end of September.
But he said yesterday that the Singapore operation has been profitable for two straight years.
Tiger's Australian arm, which started operating in 2007, has been in the red but Mr Davis pointed out that potential investors understand that initial losses are normal for a start-up company.
The key to success for a budget carrier is low costs and low fares, both of which Tiger is committed to, he added.
From 4.7 US cents (6.5 Singapore cents) last year, seat cost per kilometre is down to 4 US cents for the April to September period, he said adding: 'We have a very...vigorous focus on cost management.'
The cash from the IPO will allow Tiger to start more airlines, launch new routes and move into new markets, said Mr Davis, who declined to say more.
'The underdeveloped low-fare, low-cost model in the majority of countries in the region presents opportunities for our future growth. We are now ready to embark on the next stage of growth, and believe that a listing will help fuel that growth,' he said.
Set up in September 2004, Tiger Airways is now 49 per cent owned by Singapore Airlines. Its other shareholders include Temasek Holdings with 11 per cent, United States-based investment firm Indigo Partners with 24 per cent and Ryanasia, which owns 16 per cent.
SIA and Temasek will have their holdings diluted, possibly by a third, in the IPO. Both have 50 per cent of their shares under a six-month moratorium.
Tiger's share offer will close at 8am on Monday.
'The underdeveloped low-fare, low-cost model in the majority of countries in the region presents opportunities for our future growth. We are now ready to embark on the next stage of growth, and believe that a listing will help fuel that growth.'
Tiger president and chief executive officer Tony Davis