S$1.19-TIGA.SI
�� The stock is expected to fall below the 6-times tested $1.19 support, not just because of the penalty imposed by Australia’s Civil Aviation Safety Authority (CASA, all of Tiger Australia’s domestic flights: 60 daily flights using 10 planes would be grounded from July 2nd to July 9th, because of “safety concerns”), but because of CASA’s intention to extend the suspension through the federal court.
�� Illustrating the seriousness of the matter, Tiger has appointed Chin Yau Seng to “assist” Tony Davis. We would not rule out Davis’ departure in the not-too-distant future. (Chin was CEO of SilkAir from Mar ’07-Oct ’10, and was most recently Divisional VP Cabin Crew Operations at SIA.)
�� CASA had in March issued Tiger a show cause notice, asking Tiger to explain its pilot training and maintenance practices or face possible disciplinary action”. Tiger said it had done so “satisfactorily”.
�� Civil Aviation Authority of Singapore’s spokesperson yesterday said “it has not found any cause of concern over Tiger’s ability to operate flights in a safe manner”. We do not however expect this to offer any relief to the stock’s near term performance.
�� At $1.19, Tiger trades on 3.3x book NAV of 36 cents a share.
�� We would continue to avoid Tiger shares. (Tiger first hit $1.19 on Jun 16th.)
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