Friday 29 Mar 2024
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DUBAI (Jan 25): Airlines are starting to make a comeback to public markets in Asia Pacific, buoyed by a post-pandemic travel rebound that has seen many emerge from bankruptcy and state support.

Virgin Australia Holdings Pty Ltd plans to interview lead underwriters starting next month for a listing on the Australia Securities Exchange, less than three years after it collapsed and was removed from the bourse, Bloomberg News reported on Tuesday. In December the once-bankrupt Japanese carrier Skymark Airlines Inc raised 37.4 billion yen (US$287 million) in its Tokyo re-listing, and its shares have since risen 21%.

The share sales underscore the revival of fortunes for an industry that was decimated when the pandemic spread began three years ago, as closed borders and lockdowns led to an abrupt halt in international travel. Skymark Airlines was initially forced to scrap its relisting plan in April 2020 as a result of Covid’s spread.

In Asia alone, carriers including Singapore Airlines Ltd, Korean Air Lines Co and Cathay Pacific Airways Ltd announced US$13.2 billion of rights offers in 2020, seeking to shore up their damaged balance sheets, data compiled by Bloomberg show.

Now, as most of the world has opened up, demand for air travel has far outstripped supply as airlines have struggled to reactivate their fleets and bring back staff fast enough to cope with the surge in travelers. That has led to sky-high fares in many cases but also enabled a recovery in airline stock prices and allowed carriers to eye their first profit since the pandemic.

The return to profit for Asia Pacific airlines will be supported by robust demand as major Asian economies are forecast to avoid a recession — unlike other parts of the world — while supply will continue to be limited by constraints on returning aircraft to service and delivery delays, Bloomberg Intelligence analysts Tim Bacchus and Eric Zhu wrote in December.

The Bloomberg Asia Pacific Airlines Index has surged about 24% since a low in October, and China’s reopening is set to bring a big boost in demand, given that the country had a massive outbound travel market prior to the pandemic. The end of Covid Zero in China could lead to an 80% combined international and domestic air-passenger recovery by the end of this year, according to Bloomberg Intelligence.

Skymark Airlines’ listing in December was the first by an airline in Asia Pacific since 2018, when Korea’s Air Busan Co went public in a small US$17 million initial public offering, data compiled by Bloomberg show. There have been some airline IPOs in the US since the pandemic, however, with discount carrier Frontier Group Holdings Inc going public in March 2021. Its shares have slumped 34% since then.

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