Cheap doesn’t mean value. That’s certainly the case with the aviation money pit also known as Tigerair Australia, the worth of which has plummeted to virtually nothing in just over a year.
Last July Virgin Australia bought 60% of the low cost carrier from Singapore Airlines for AUD35m. Today it paid SQ just AUD1 for the remaining 40%.
And perhaps that was too much for an airline that has never made money and recorded a AUD11.6m loss for the three months to September 30.
At least that was Virgin’s share of the carnage, the rest borne by SQ, also a major shareholder of Virgin Australia, which announced its first quarter results this morning.
They didn’t make for pretty reading – a statutory loss after tax of AUD59m.
Passenger numbers were down while capacity rose.
Further challenges lie ahead. It’s expected Virgin will have outright ownership of Tigerair by the end of this year.