Indonesia AirAsia to Go Public

Budget airliner PT Indonesia AirAsia—the subsidiary of Malaysian AirAsia Berhad—is preparing to hold an initial public offering on the Indonesia Stock Exchange in late 2017 or early 2018. Before going public, the airline will seek to improve its finances.

“We are improving our financial performance. We cannot say yet what the improvements are,” president director Sunu Widyatmoko told yesterday.

He did say that the IPO proceeds will be used to increase AirAsia’s number of fleet and flights.

Based on the financial statements of AirAsia Berhad, which owns 49 percent stake in Indonesia AirAsia, the subsidiary posted negative performances last year with revenues dropping 37 percent to Rp5.02 trillion.

The main reason for the income decline was a decrease in passengers’ volume by 22 percent.

In December 2015, Indonesia AirAsia recorded a loss of Rp885.2 billion and a net loss of Rp2.33 trillion. It was an even bigger loss compared to 2014, when the company noted a loss of Rp635.8 billion and a net loss of Rp883.5 billion.

The airliner also recorded a foreign exchange loss of Rp1.27 trillion last year, which prompted its Malaysian parent company to inject an additional capital of Rp2.05 trillion in quarter three, in the form of perpetual capital securities.

Sunu said that another cause for last year’s major loss was the Flight QZ8501 disaster. The plane crashed while en route from Surabaya to Singapore, claiming the lives of 155 passengers and seven crew members.

AirAsia Berhad CEO Tony Fernandes said the two main reasons why Indonesia AirAsia needs to become a listed company is to improve transparency and corporate management, and to allow Indonesian investors to own the airliner’s shares.

Fernandes also said in Jakarta earlier this week that Indonesia AirAsia had gone through rough times last year, but the company now aims to leave that past behind and focus on business expansion.

In mid-2015, Indonesia AirAsia is one of 13 airlines ordered by the Transportation Ministry to raise capital due to its negative equity. At that time, Indonesia AirAsia’s equity was minus Rp1.32 trillion, with liabilities amounting to Rp6.15 trillion and an assets value total of Rp4.83 trillion.