Singapore budget carrier Tiger Airways will price its initial public offering at $1.50 a share, in the middle of an indicative range which will value the deal at around $248 million, two sources close to the  deal said on Monday. 

 

The IPO price compares with an indicative range of $1.35-$1.65, the sources told Reuters. Tiger's IPO, is the first listing of an Asian airline in almost five years and comes at a time when the air travel market is still struggling and a tough environment has pushed some traditional carriers to the brink of bankruptcy. 

 

The sources declined to be identified because the deal is not public. A spokesman for Tiger Airways declined to confirm the final price. 

 

The airline, 49% owned by Singapore Airlines (SIAL.SI), will list its shares on the Singapore Exchange on Jan. 22. Citigroup (C.N), Morgan Stanley (MS.N) and DBS (DBSM.SI) are handling the IPO, according to the prospectus. 

 

Tiger said it would use the proceeds to fund aircraft purchases and set up a new operating base as well as pay off some existing debt. 

 

Tiger, in which state investor Temasek (TEM.UL) also holds a stake, is selling around 165 million shares, or about 30% of its enlarged share capital. 

 

About 94.2% of its IPO comprises new shares while the remaining 5.8% are vendor shares currently held by Indigo Partners. 

 

RyanAsia, a company controlled by the founding family of Irish budget airline RyanAir (RYA.I), will divest some of its stake in Tiger if an over-allotment option is exercised. 

 

Singapore Airlines and Temasek will remain invested, although their stakes will be diluted after the IPO. 

 

Tiger has grown rapidly since it began operations in Singapore in September 2004 and briefly turned profitable in its third year of service. 

 

The carrier saw a $50.8 million loss for the financial year to March 2009 due to costs incurred in starting up operations in Australia. 

 

Tiger has 17 Airbus (EAD.PA) A-320 aircraft in service with orders for another 55 A-320s that will be delivered between now and 2016.