Business

AirAsia plans IPO and more
destinations next year

Budget carrier Indonesia AirAsia (IAA) is set to further expand its business next year by offering more domestic and international routes from its new hub in Makassar, South Sulawesi, as well as it’s upcoming initial public offering (IPO).

IAA president director Dharmadi said the airline would connect Makassar with major cities across the country and Southeast Asia including Jakarta; Denpasar, Bali; Surabaya, East Java; Balikpapan, East Kalimantan; Kuala Lumpur and Kota Kinabalu, Malaysia; and Singapore.

“We decided to add more routes from Makassar because the city has a number of flight slots, which
gives us room to grow. It is also an emerging market for the aviation industry in the east,” Dharmadi said in Jakarta on Wednesday on the sidelines of IAA 8th anniversary celebrations.

He said that he had met with South Sulawesi Governor Syahrul Yasin Limpo, who gave the company’s plan a lot of support.

“The governor is very enthusiastic about our plan because he plans to make Makassar the aviation
center of the eastern part of Indonesia. There is an excellent opportunity to develop human resources from this city and connect it with more places in the future such as the Philippines and Hong Kong,” he continued.

In order to support the expansion, IAA will take delivery of 10 Airbus A320s throughout 2013, which will increase its fleet to 32 aircraft.

By operating 32 aircraft, the company expects to carry 8 million passengers next year.

In addition, he said that IAA is going to carry out the IPO in the third quarter of 2013.

He declined to provide further details of the plan, such as the number of shares that they would float on Indonesia Stock Exchange (IDX) and how much money they would raise from the IPO, but he said that they have appointed the underwriter.

“I cannot give you details of the IPO plan right now but we have appointed the underwriter,” he said, refusing to mention who the underwriter was.

He said that “going public” was not merely about raising funds but rather to help the company strengthen its system of accountability and transparency.

Moreover, he said that IAA will operate 70 aircraft over the next five years in order to tap into the country’s growing demand in the leisure and business travel market.

According to data from the Transportation Ministry, the number of airline passengers in Indonesia reached 68.19 million last year, a 16.7 percent increase from 2010 of 58.39 million.

IAA became the strongest international player in 2011, carrying 3.38 million passengers on international routes, or 41.58 percent of the international market share, comparably, it carried only 181,200 passengers on domestic routes, 3 percent of the domestic share.

The airline has carried 5.35 million passengers for the year to date and it expects to reach 6 million passengers by the end of this year. In July this year, PT Fersindo Nusaperkasa, the owner of a 51 percent stake at IAA and the Malaysian based low-cost carrier AirAsia Berhad signed a memorandum of understanding (MoU) with PT Metro Batavia, the owner of Batavia Air, to acquire the domestic carrier.

The acquisition was a move that was expected to strengthen AirAsia’s foothold in the fiercely competitive environment facing low-cost airlines in Indonesia.

However, Fersindo and AirAsia Berhad announced the cancellation of its plan to acquire Batavia Air in mid October, saying the deal “poses many risks” and “may prompt concerns” among the Malaysia-based company’s shareholders.

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