Mandala will cease operations from July 1, Tiger Airways said in a statement to the Singapore stock exchange on Wednesday. ''Mandala wouldn't be able to sustain its operations and the airlines key shareholders decided to cease funding the carrier,'' it said in the statement. The Singapore-based budget carrier had last year increased its stake in the venture to 35.8%.
''Mandala's financial results reflect the challenges that it is facing in the difficult operating environment,'' Tiger Airways chief executive officer Lee Lik Hsin said in the statement. The partners in Mandala have jointly come to the conclusion to cease funding the airlines operations.
Tiger Airways is grounding planes and canceling aircraft orders as part of a restructuring after mounting losses led largest shareholder Singapore Airlines to name a new CEO for the low-fare airline. The restructuring efforts are symptomatic of the challenges budget airlines face in Southeast Asia, where competition among half a dozen carriers has pushed fares down.