SINGAPORE, Oct 10 ― Tiger Airways Holdings Ltd, a money-losing carrier partly owned by Singapore Airlines Ltd, fell to the lowest level since it began trading in 2010 after saying it’s reviewing funding options.

Tiger Air dropped 5.1 per cent to 37.5 Singapore cents as of 10.11am local time, the lowest intraday price since January 22, 2010. The budget airline has declined 26 per cent this year, compared with a 2 per cent gain for Singapore’s Straits Times Index.

“Investors are worried that Tiger Air might need to do a rights issue,” K. Ajith, a Singapore-based analyst at UOB Kay Hian Pte., said by phone. The carrier may need at least S$150 million (RM384 million) in new funds, he said.

Tiger Air is reviewing funding options, including a rights issue, and will sublease 12 planes to IndiGo, an Indian low-cost carrier, at a discount in light of overcapacity in the industry, the airline said yesterday. Excess capacity and competition have pushed down fares at budget carriers, forcing some including AirAsia Bhd to defer plane deliveries and cancel orders.

Tiger Air’s net loss widened to S$65.2 million in the quarter ended June from S$32.8 million a year earlier because of costs incurred from closing an Indonesian venture and operations in Australia. The fundraising will help Tiger Air strengthen its balance sheet and meet corporate requirements, the company said in a statement after the market’s close yesterday.

“As and when a decision has been made by the board to proceed with any fund-raising option, the company will make the appropriate announcements,” Tiger Air said.

Cash flow

The agreement with IndiGo will help significantly cut Tiger Air’s cash-flow burden by about S$162 million during the sublease period of three years to four years, the carrier said. Tiger Air will make a one-time accounting provision of about S$93 million for the excess planes and expects to fully utilize this provision over a six-year period.

“This is definitely a better option than keeping it idle and burning cash on these assets that are not generating income,” Eugene Chua, a Singapore-based analyst at OCBC Investment Research, wrote in a note today. The brokerage is reviewing its sell rating on the stock. ― Bloomberg