Indonesia AirAsia plans to sell up to 30 percent of its stake via an initial public offering towards the end of this year to fund business expansion, group chief executive Tony Fernandes said on Monday (07/08). (Reuters Photo/Ruben Sprich)

Indonesia AirAsia Plans to Sell Up to 30% Stake in Q4 IPO: Fernandes

BY :SARAH YUNIARNI

AUGUST 07, 2017

Jakarta. Indonesia AirAsia, the local affiliate of Southeast Asia's largest budget airline, plans to sell 25 percent to 30 percent of its stake via an initial public offering towards the end of this year to fund business expansion, group chief executive Tony Fernandes said on Monday (07/08).

The Malaysian tycoon, who was in Jakarta for the inauguration of Indonesia AirAsia's maiden flight to Macau, China, said the low-cost carrier is currently awaiting approval by Indonesia's Financial Service Authority (OJK) with regards to the IPO plan.

He said the company plans to appoint foreign and local underwriters for the share sale.

"We see that the IPO depends on market conditions, but we aim to undertake it for faster business growth and to increase the number of tourists coming to Indonesia," Fernandes said.

Proceeds from the share sale will be used to fund route expansion and to enlarge the airline's fleet, he said.

"We aim to add two more aircraft by the end of this year as we currently operate 22, and we estimate that we will be able to add six to eight more aircraft by next year," he said.

The chief executive said the Jakarta-based airline aims to operate about 40 to 42 Airbus A320 aircraft by the end of 2019.

Fernandes neither provided a specific time frame for the IPO plan, nor specify the targeted proceeds.

However, Indonesia AirAsia chief executive Dendy Kurniawan said the IPO is scheduled for the fourth quarter of this year.

The proceeds will also be used to expand flights to the eastern part on Indonesia, beyond Bali.

Fernandes said AirAsia sees potential growth for destinations beyond Bali.

"There are other [potential] new tourist destinations, such as Labuan Bajo," he said.

Labuan Bajo in East Nusa Tenggara is a bustling tourism attraction, offering various adventures, from diving to seeing rare Komodo dragons.

Indonesia AirAsia's latest data shows that its seat-load factor – which indicates how efficiently an airline makes use of its seating capacity – increased to 82 percent in the first quarter of this year from 79 percent in the same period last year.

Fernandes said the AirAsia Group has set a target for its Indonesian affiliate to increase its seat-load factor to 85 percent by the end of this year.

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