THE SINGAPORE EXCHANGE has been kept busy for several weeks now, querying companies whose shares have spiked suddenly on large volumes. Low cost carrier Tiger Airways Holdings is the latest to join the club. At 3.22pm today, it was queried about its trading activity. As of 5.30pm, it had yet to respond.

Shares of Tigerair surged to as high as 54.5 cents at 3.14pm, a 21.1% increase from their close on May 29 at 45 cents. They ended today at 53 cents. Trading volume was unusually heavy, at close to 30 million shares – the highest volume in two years and 12.9 times the average traded over the past 30 days.

Will Tigerair join the lengthening list of companies involved in M&A activity? Speculation is that the company could have found a buyer for its 32.5% stake in Tigerair Mandala, which operates out of Jakarta. “If Tigerair sells its 32.5% stake in Mandala, our loss forecast may be reduced,” says CIMB Research in a report earlier this month. The brokerage expects Tigerair to report losses of $59.4 million for FY2015 ended March. “But Singapore and Australia are forecast to remain in the red for another two years.”

Citilink, a subsidiary of Garuda Indonesia, had initially been rumoured to be interested in an acquisition. However, the company later denied these rumours. Other players said to have indicated interest are AirAsia and its Indonesian arm.

Another theory is that Tigerair could end up being bailed out by a shareholder or bought out by a third party. The company badly needs help. On May 2, Tigerair had reported losses for FY2014 of $223 million. In FY2013, its losses had amounted to $45.4 million. At the same time, it gave notice that it has recorded pre-tax losses for the three most recently completed consecutive financial years. Companies are placed on a watch-list if they report pre-tax losses for three consecutive financial years and have an average daily market capitalisation of less than $40 million over 120 market days. Tigerair is in no danger as its market cap is in excess of $400 million. However, it is struggling to turn a profit in the low cost market, which is facing issues of overcapacity.

An outright acquisition of Tiger would be unusual at current prices. Even before the stock ran up, it was trading above its net asset value of 28 cents per share. It also has net gearing of 68%. There has been some speculation that Singapore Airlines, which owns 40% of the company, could raise its stake. On May 12, Tigerair appointed a new CEO, Lee Lik Hsin, who has spent his entire career at SIA.

Indeed, it is in SIA’s interest to fix Tigerair quickly. Although SIA’s own operations are performing, with operating earnings up 37% to $256 million in FY2014 ended March, its other units are not doing as well. Operating earnings at SilkAir fell 63% to $35 million. SIA Cargo suffered a loss of $100 million. And Tigerair contributed an associate loss of $118 million.

Even if there is a willing buyer for Tigerair however, the company’s troubles will require a great deal more than injection of funds to solve. The promising story of an endless supply of middle-class Asians clamouring to travel the world has been overshadowed by overwhelming supply. A HSBC transport report this month says that long-haul routes are performing better than intra-Asian and domestic routes. But it is the latter that low cost carriers such as Tigerair specialise in. Meanwhile, political instability and deterioration in international relations among countries in the region is likely to continue affecting travel patterns.

Investors should be wary of chasing Tigerair’s stock up further.