AirAsia X board to meet soon to pick advisers for IPO

>> Wednesday, April 27, 2011

SEPANG: Long-haul budget carrier AirAsia X has set the ball rolling for its initial public offering (IPO) exercise, as it has sent out request for proposals (RFPs) to local and international banks and will appoint advisers after a board meeting in June.

AirAsia X Sdn Bhd chief executive officer Azran Osman-Rani (pic) said the deadline for the RFPs to be submitted is next week before bankers are called in for a selection process in May.

“The board of directors will then have a meeting in June, in which advisers will be chosen and the specific details of the IPO such as how much will be raised, where and when the listings will take place, as well as the structure of the IPO will be ironed out,” he told StarBiz in an interview yesterday.

Azran said AirAsia X's IPO could raise similar amounts seen by its sister airline AirAsia Bhd, which raised some RM863mil through the issuance of 700.51 million new and existing shares in 2004.

He added that plans for a dual listing was still a viable option, but remained undecided on which market would be suitable for the airline. Some of the suggested markets for its dual listing include Europe, the United States and Hong Kong.

AirAsia X first mentioned its plan to seek a listing last year, after it separated its commercial operations from AirAsia. The reason for a listing is to help the airline fund its future aircraft orders.

Azran said that the company had taken steps to improve its balance sheet, having reduced its gearing from 3 times early last year to 1.5 times by the end of last year.

“In the middle of last year, we had a rights issue of RM100mil to our shareholders in a move to become more independent. Other balance sheet strengthening measures include executing a sale and leaseback for two of our planes as well as restructuring our aircraft deliveries,” he added.

Current shareholders of AirAsia X include Aero Ventures Sdn Bhd (52%), AirAsia Bhd (16%), Corvina Holdings (10%), Orix Corp (11%) and Manara Consortium (11%)

However, Azran stressed that a factor weighing on its IPO process was the lack of a route allocation policy by the Government, which is needed to provide clarity for the airline's current and future investors.

He said the airline needed to be able to chart its growth strategy and be certain of the routes it will be receiving before investors are willing to pump money into the company.

“Right now, investors will say we are giving you so much money, we know you can buy planes but where will you be flying to?” he added.

Under the Economic Transformation Programme, the Government wants to increase flight frequencies and air rights to 10 priority cities, namely Beijing, New Delhi, Melbourne, Mumbai, Osaka, Seoul, Shanghai, Sydney, Taipei and Tokyo.

The plan to increase flight frequencies will be done via an air rights allocation framework to be spearheaded by the Transport Ministry.

The reason for this is simple as Malaysia is losing out to neighbouring countries Singapore and Thailand in tourism revenue from medium-haul markets.

AirAsia X has yet to receive approval to ply the Kuala Lumpur-Sydney route, despite having requested for it over a year ago.

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