AirAsia: No more IPOs for affiliates

KUALA LUMPUR: Low-cost carrier AirAsia Bhd, which has scrapped plans for an initial public offering (IPO) for PT Indonesia AirAsia, will not be embarking on any more IPOs in the future following a change in its business strategy, said its group CEO Tan Sri Tony Fernandes.
"IPO is not the way our group wants to go anymore…we believe that consolidation and creating a whole new company is the way forward. That's what we're working towards right now," he told reporters at the launch of AirAsia's Premium Flex yesterday.
"We believe there's tremendous value if we were to give Indonesia shareholders or Thai shareholders et cetera the opportunity to participate in the whole group, that's better than just participating in one country," he added.
Last month, a local business daily reported that AirAsia scrapped its IPO plans for its Indonesian affiliate due to poor financial results. Indonesia AirAsia reported a net loss of RM102.35 million last year, compared with a net profit of RM52.5 million the year before, despite higher revenue.
Its first quarter ended March 31, 2014 results were also dismal, with a net loss of RM106.78 million.
According to reports, the listing of Indonesia AirAsia was initially planned for early 2012 but was put on hold as the group started negotiations to acquire a stake in Indonesia's domestic carrier Batavia Air. The listing plan was revived when talks with Batavia Air fell through.
Indonesia AirAsia's IPO plans were delayed again when Fernandes told reporters in August last year that it will only list the affiliate in the fourth quarter of 2013 or early 2014, as the group was working on "getting all the regulatory approvals and the books right".
Meanwhile, on AirAsia Japan, Fernandes said it will officially launch its Japanese unit in the second quarter next year, if not sooner.
"In terms of Japan flying to America, I've always had it very clear in my mind that it is the ultimate aim, but we've got to launch AirAsia Japan first," he said.
AirAsia Japan is a venture between AirAsia (49%) and local partners Rakuten Inc (18%), Octave Japan Co. Ltd (19%), Noevir Holdings Co. Ltd (9%) and Alpen Co. Ltd (5%). This is AirAsia's second attempt at a budget airline in Japan.
AirAsia's latest service called Premium Flex, is catered to the needs of business travelers especially small and medium enterprise (SME) owners, traders, entrepreneurs and young executives who demand flexibility.
With Premium Flex, passengers can change their flight up to two times with no change fee, complimentary 20kg baggage allowance, Xpress boarding, Xpress baggage and Premium Seats.
AirAsia group head of ancillary income Kenny Wong said Premium Flex costs on average, an extra RM120 for AirAsia and AirAsia X flights, and provides savings of RM300 or more.
Premium Flex is available on all AirAsia flights except for Sri Lanka.