Why Has Tiger Airways Holdings Limited Spiked By 27% in a Week?

Since last Friday, Tiger Airways Holdings Limited (SGX: J7X) has gained around 27% to close at S$0.33 on Thursday. This makes the share one of Singapore’s big winners as the market benchmark, the Straits Times Index (SGX: ^STI), inched up by only 0.2% during the same timeframe.

Tigerair, which counts Singapore Airlines Ltd (SGX: C6L) as its largest shareholder, was started in 2004. The budget carrier currently flies to 38 destinations across Asia-Pacific.

The airline hadn’t seen a quarterly profit in a while till its 26 January 2015 earnings release for its fiscal third quarter for the financial year ending 31 March 2015 (FY2014); the last time Tigerair saw a quarterly profit was in the second quarter of FY2013. The market cheered Tigerair’s results and caused the carrier’s share price to hit its highest level since early October 2014.

Net profit for the fiscal third quarter came in at S$2.3 million, a huge improvement compared to the loss of S$118.5 million seen in the same quarter a year ago. This was mainly because of absence of losses relating to the carrier’s overseas operations.

Total revenue for the fiscal third quarter saw a 5.9% year-on-year increase to S$182.3 million, mainly on the back of better yields and higher traffic volume. Total revenue consists of passenger seat revenue (sales of tickets) and ancilliary revenue (sales of in-flight items like food and beverage, etc).

Revenue from the former rose 13% year-on-year to S$148.3 million while that of the latter dipped 17% to S$34 million.

Mr Lee Lik Hsin, Group Chief Executive Officer of Tigerair, commented on the firm’s latest results:

“We had to make some difficult decisions in the turnaround process. Though we are not out of the woods yet, we are encouraged by the improving financial results. We are also heartened by strong shareholders’ support of our rights issue.”

The low-cost carrier had a rights issue recently at an issue price of S$0.20 for each rights share. Each shareholder was entitled to 85 rights shares for every 100 shares held. 1.15 billion new shares were issued in total for the rights issue exercise, generating a cool S$230 million in proceeds for the company.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.