AirAsia unit in PH plans to go public in 2016

Budget airline chief cites improving ticket sales

THE PHILIPPINE unit of Malaysian budget airline AirAsia Berhad may go public by 2016 to finance potential expansion moves amid improving business prospects, one of its Philippines-based executives said.

The plan was sparked by a tweet sent out yesterday by AirAsia founder Tony Fernandes, citing improving ticket sales for its Indonesian and Philippine businesses.

“We may reconsider IPO [in] both countries,” Fernandes said.

AirAsia Zest CEO Joy Caneba yesterday confirmed that the possibility of an initial public offering was taken up in a meeting last week.

Air Asia Bhd operates in the Philippines through Filipino company Air Asia Inc., which is in the process of increasing its 49-percent stake in AirAsia Zest.

“Performance has improved, and we are gearing toward listing. The likelihood is next year as there are so many activities that need to be undertaken for an IPO,” Caneba said.

However, Caneba and Fernandes did not give further details on the planned offering.

In an interview last November, Fernandes said AirAsia Bhd was committing at least $500 million (P22.3 billion) for the expansion of its Philippine operations once its units were consolidated.

The Malaysian tycoon had said that consolidation was part of the company’s strategy to enable its Philippine unit to post profit within this year.

The carrier’s Philippine fleet is composed of more than a dozen Airbus A320s operating mainly out of Manila’s Ninoy Aquino International Airport, Cebu and Kalibo.

Fernandes said the carrier was planning to add more planes once the restructuring of the domestic business was completed.

AirAsia Bhd has so far been lending financial support for Air Asia Inc., which it controls with Filipino partners.

In a filing with the Malaysian stock exchange on Feb. 26, AirAsia Bhd disclosed that it loaned another $22.34 million “to facilitate the ordinary course of business of Air Asia Inc” in the fourth quarter of 2014.

In its fourth quarter filing, Fernandes said the carrier’s Philippine unit was recording an “increase in yield” and that losses were “narrowing quite substantially.”

“The move to Naia (Ninoy Aquino International Airport) Terminal 3 was a game-changer as we saw demand increasing, allowing the associate to push up its load factor by 8 percent to 72 percent in (the fourth quarter),” Fernandes said.

“The affiliate will continue to focus on leisure destinations such as Puerto Princesa and more capacity will be added to Kalibo and Cebu,” he added.