The Philippine unit of Malaysian budget carrier AirAsia Berhad is seeking a valuation of at least $500 million for its initial public offering (IPO) set within the next two years, one of its top executives said.
Michael Romero, vice chair of Philippines-based AirAsia Inc., said in a recent interview that plans to go public were still on track. This follows recent statements by Malaysian tycoon Tony Fernandes, founder of AirAsia Berhad, relating to a plan to hold an IPO for its Philippine and Indonesian units.
“We are looking at a [float] of 30 percent to 40 percent,” Romero said, meaning the carrier can raise as much as $200 million from its IPO. He declined to elaborate, as plans have yet to be finalized.
The decision comes as domestic financial operations, which include AirAsia Philippines and AirAsia Zest, are improving, consultancy firm Capa-Center of Aviation said in a report this month.
“The AirAsia Group’s Philippine affiliates likely remained in the red in [first quarter 2015] but are expected to be profitable in the second quarter of 2015,” Capa said. “This would mark the first profitable quarter for AirAsia in the Philippines.”
Capa noted that the second quarter is typically the strongest period for local carriers as this is marked by the travel-heavy summer holidays.
AirAsia, which had 15 Airbus A320s in the Philippines at the end of 2014, controls about 10 percent of the Philippine market. It mainly competes Philippine Airlines and budget airline Cebu Pacific in the domestic market.
AirAsia Philippines still receives financial support from its parent company. AirAsia Bhd said in a filing to the Malaysian Stock Exchange last Feb. 26, 2015 that it provided another $22.34 million loan to AirAsia Inc., as the Philippine unit is formally known, “to facilitate the ordinary course of business of AirAsia Inc.”
In an interview last November, Fernandes said AirAsia Bhd was committing at least $500 million for the expansion of its Philippine operations once its units were consolidated. He was referring to the consolidation of both AirAsia Philippines and AirAsia Zest, which is still ongoing.