Air Asia raising PH unit’s capital
MALAYSIAN budget airline Air Asia Berhad is planning a multi-billion peso capital call for its Philippine unit, which recently completed a multi-year consolidation process that management said would allow it to better compete with domestic rivals Philippine Airlines and Cebu Pacific Air.
The company, now called Philippines Air Asia Inc., is planning to increase its capitalization from P2 billion to P5 billion, lease five additional Airbus A320s next year and proceed with a $200-million initial public offering by 2018, its CEO Joy Cañeba told reporters in a briefing yesterday.
Air Asia’s domestic business, which prior to consolidation operated alongside Air Asia Zest, has been losing money since it began in 2012. But Cañeba said the added funds for expansion, low fuel costs and more streamlined operations, meant the airline could post a profit in 2016.
She said the carrier, which has 12 Airbus A320s and a market share of about 10 percent, planned to carry six million passengers in 2016 as it intended to expand in China and South Korea. It expects to hit four million passengers this year, or the same as in 2014, given adjustments in its fleet size, she said.
“I think we can still compete in both international [and domestic],” Cañeba said. “In the international arena, with the network of Air Asia, we have a better advantage than the others.”
Air Asia was started by Malaysian tycoon Tony Fernandes, who said in previous interviews that the Philippines remained a key market for the group. Its Filipino partners here include businessmen Alfredo Yao, Marianne Hontiveros, Antonio Cojuangco Jr. and Michael Romero.
Cañeba said the capital call would be done in tranches, with the initial phase to support spending for 2016. She said stockholders were also committed to supporting the capital infusion and that they were also talking to new investors, likely wealthy individuals, which she did not disclose.
The fundraising round comes ahead of the listing Philippines Air Asia.
“The IPO will definitely happen,” Cañeba said, adding that it was deferred to 2018 due to the reflecting exercise this year. The plan, which has yet to be finalized, involves a primary share sale that would place about 30 percent of the company in the public’s hands.
Earlier, aviation consultancy CAPA-Center for Aviation said that 2016 would be a “critical year” for the Air Asia Group to prove that it could be a viable carrier in the Philippine market.
“If it meets its 2016 goal of becoming profitable, aspirations for an initial public offering within two years will become realistic, providing a foundation for consistent growth,” CAPA said in a previous report.
