Boracay shutdown, escalating fuel costs force Air Asia PH to delay listing

Philippines Air Asia, a unit of regional giant Air Asia Berhad, is likely to postpone its domestic initial public offering to 2019, citing a combination of factors that include the six-month closure of Boracay island and higher fuel prices.

Dexter Comendador, CEO of Philippines Air Asia, told reporters on the sidelines of an Asian Institute of Management business forum on Friday the company was planning to launch its public offering by the middle of 2019 instead of the second half of this year.

“As I see it, we might be delayed,” Comendador said of the IPO, which Air Asia Group CEO Tony Fernandes earlier said could raise around $250 million.

“There are too many problems at the moment, especially fuel prices, the foreign exchange rate plus the Boracay closure,” said Comendador, suggesting investors were jittery about key government policies and external factors affecting the airline industry.

The Duterte administration ordered the six-month closure of Boracay, a popular tourist destination, on April 26, which was at the peak of the busy summer travel period. This was to make way for a rehabilitation effort ahead of the island’s reopening on Oct. 26 this year.

The year-on-year price of jet fuel, a major operating expense, is up 24.5 percent to $92.4 per barrel as of Aug. 31, the International Air Transport Association said.

Poor market conditions, which partly came about due to escalating costs, have also caused companies to either defer or downsize equity offerings. The benchmark Philippine Stock Exchange index is down almost 12 percent since the start of the year.