MANILA, Jan 8 — Tiger Airways Holdings Ltd said yesterday it would sell its entire 40 per cent stake in its Philippine business with the country’s largest budget carrier Cebu Air Inc taking over in a further consolidation in domestic airlines.

Cebu Air, operator of Cebu Pacific, said in a statement it would pay US$15 million (RM49.3 million) for Tiger Airways’ 40 per cent in Tigerair Philippines and 60 per cent held by the Singapore-based airline’s local partners. That would give Tiger US$6 million for its stake.

The deal, the second consolidation among carriers in the Philippines in a year following AirAsia Bhd’s buy-in of unlisted Zest Air, should bode well for the country’s airline sector, analysts say.

“The aviation market in the Philippines is overcrowded and largely unprofitable, except for market-leader Cebu Air. The deal will allow Cebu Air to solidify its market position,” Raymond Yap, analyst at SB Equities Inc, said in a research note.

Cebu Air’s takeover of Tiger Philippines will allow it to raise its share of slots by about 10 per cent in Manila’s crowded runways and limited terminal capacity, Yap said. Cebu Pacific is the country’s largest airline, with a market share of about a third compared with Tiger’s estimated 4 per cent.

Tiger Airways has struggled to make headway because of its small operations locally and “irrational pricing” by rivals, Yap said.

Shares of Cebu Air climbed 2.5 per cent in early trade yesterday while Tiger Airways fell nearly a per cent.

Cebu Air’s shares are unlikely to gain much from the deal, with investors concerned higher fuel prices could hurt the airline’s margins and overall profitability, said Gregg Ilag, analyst at brokerage firm AB Capital Securities in Manila.

Cebu Air said in a joint statement the alliance with Tiger will allow it to fly to high growth markets including Australia and India, with the two airlines to jointly operate and sell common routes between Singapore and the Philippines.

However, the alliance will strengthen the two carriers’ domestic presence more than its regional market share, some say.

“This alliance will be a threat only on the domestic front, particularly to Philippine Airlines. I think the international route is still more favourable for AirAsia given their network,” Ilag said. — Reuters