‘IPO fastest way for firms to access funds’
KUALA LUMPUR: Global airline players are exploring new opportunities to maintain their businesses thrust, and the Asia Pacific market has seen many exciting initial public offerings (IPOs) and projects for investors.
“If these larger players find themselves in need of additional cash to accelerate consolidation, they may opt for IPOs in order to acquire the necessary funds fast,” said Gediminas Ziemelis, chairman of aviation-based service provider Avia Solutions Group.
He said the Asia-Pacific region continued to be the most thrilling scene in terms of growth and possibly new IPOs due to rapidly growing middle-class and the rising number of air passengers.
“The capital markets in the region are generally developing very dynamically, including those in the aviation sector. I see no reason to expect any negative changes to this trend any time soon,” Ziemelis added.
NST Business previously reported that low-cost airline AirAsia, for example, was optimistic of its operations in Indonesia and the Philippines that would contribute strong growth for the group.
AirAsia group chief executive officer Tan Sri Tony Fernandes said the listing status plans for its operations in both countries were proceeding as planned.
He indicated it was a good time for the low-cost carrier to expand its presence in the Philippines via IPO, spurred by the support from the Philippine government policies.
It was reported that AirAsia Bhd’s Philippine unit was expected to raise about US$250 million (RM1.03 billion) via IPO in the middle of next year to fund its expansion programme.
Jet fuel prices have spiked 12 per cent in the past one month and risen 31 per cent year-onyear (YoY), negatively impacting airlines in the Asia Pacific.
Fuel cost is the single largest cost component for an airline, accounting for 30 per cent of their total operating cost on average.
Most Asia-Pacific airlines’ earnings are highly sensitive to oil price movements, making investors tend to avoid airlines stocks when oil prices rise. Ayisy Yusof