Singapore's Tiger Airways buys Indonesia carrier stake

The investment will see Tiger Airways become the second biggest shareholder in Mandala, which has undergone financial restructuring after being grounded in January last year due to massive debts.

Indonesian investment company Saratoga Group will hold a 51.3 per cent stake while the remaining 15.7 per cent will be held by Mandala's previous shareholders and creditors.

Tiger said in a statement the investment in Mandala will be be held through a wholly-owned subsidiary, Roar Aviation Pte Ltd and expects the firm's air operator's certificate to be reactivated next month and flights to resume in April.

Mandala Airlines -- which was owned by the Indonesian military until 2006 when private investors took over -- will adopt Tiger Airways' low-cost carrier model and will use Airbus A320 aircraft in its fleet.

It aims to fly within Indonesia and to international destinations within a five-hour flying radius.

The number of aircraft, and the initial routes and destinations "will be announced once all approvals have been granted by the regulators and authorities," said Tiger Airways, which is partly owned by Singapore Airlines.

"Mandala is the first of Tiger Airways' joint venture 'cubs' and represents a significant step in our efforts to expand our 'paw print' in this region," said Tiger Airways Holdings Ltd chief executive Chin Yau Seng.

Tiger Airways, which has domestic operations in Australia, has been looking for expansion opportunities in Asia and last year it raised more than Sg$158 million ($126 million) in a rights issue to fund its plans, including the purchase of aircraft.

The acquisition comes as Tiger Airways itself struggles to rebuild its dented reputation after aviation regulators in Australia grounded its domestic services for six weeks last year, citing safety concerns.

The suspension in July last year led to a major management shake-up in the airline, which is partially owned by Singapore Airlines and government investment arm Temasek Holdings.