AirAsia plans US$300m IPO for Indonesian unit in 2016

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KUALA LUMPUR: Low-cost carrier AirAsia Bhd, Asia’s second-largest budget carrier by market value, is planning an initial public offering (IPO) for its Indonesian business early next year that will raise about US$300 million.

It plans to sell a 30% stake in the Indonesian carrier, group chief executive officer Tan Sri Tony Fernandes told Reuters on the sidelines of the World Economic Forum in Jakarta yesterday.

Meanwhile, Bloomberg, also quoting Fernandes, reported that AirAsia will be assigning the bankers for the IPO soon and that it will be making an announcement on the matter in the next couple of months.

Fernandes said a share sale for AirAsia’s Philippine arm will then follow, according to Bloomberg, which noted that the listing plans come after a plane operated by AirAsia’s Indonesian affiliate crashed in December en route to Singapore from Surabaya, killing all 162 people on board.

The airline, said Bloomberg, is hoping to take advantage of rapid growth in Asia-Pacific, where the number of passengers is projected to grow nearly 5% a year in the next two decades, according to the International Air Transport Association.

“There’re tremendous new tourism opportunities, and secondary cities in Indonesia are booming. We are very bullish about developing new international links out of the secondary- and third-tier cities in this wide country,” Fernandes said in an interview with the news agency in Jakarta.

Fernandes also shared that “no progress” had been made on restarting service between Singapore and Surabaya after the December crash.

AirAsia expects to start a Japan venture early next year and is currently in the final stages of the application process, he said.

The carrier teamed up with Rakuten Inc in July after ending a joint venture with ANA Holdings Inc in 2013. Fernandes said AirAsia (fundamental: 0.2; valuation: 0.8) will be profitable this year, regardless of oil prices.

Its shares closed unchanged at RM2.26 yesterday, with a market capitalisation of RM6.29 billion.

 

This article first appeared in The Edge Financial Daily, on April 21, 2015.