Virgin has assumed full control of loss-making budget carrier Tigerair Australia – for the princely sum of AU$1.00.
The nominal one-dollar cost is for the remaining 40% Virgin Australia did not own.
Virgin Australia took a 60% stake in Tigerair in 2013 for AU$35 million and says a deal has been reached to buy the remainder of the carrier, which has struggled for profitability.
It was also revealed that Singapore Airlines will take its stake in the main Tiger Airways brand — of which Tigerair Australia was a subsidiary — to 55% for majority control in a bid to improve its financial performance.
Tiger will continue to license its brand to Virgin.
"Under this proposed transaction, we will benefit from the economies of scale and achieve profitability ahead of schedule by the end of 2016, by leveraging the resources of the wider Virgin Australia Group," said Virgin CEO John Borghetti.
The Tiger Airways brand has been hit by intense competition on most of its Southeast Asian short haul routes, which are dominated by Malaysia’s AirAsia and Singapore-based Jetstar Asia.
Both Virgin Australia and main rival Qantas have had a tough year with both suffering heavy operating losses in what Borghetti called ‘a subdued consumer demand in the Australian domestic market.’
